SEK could be supported by a less accommodative Riksbank - BNPP

Research Team at BNP Paribas, agrees with the market consensus that the Riksbank and Norges Bank are likely to leave policy unchanged today.

Key Quotes

“Of the two meetings, the Riksbank will probably get more focus given current very weak levels of the SEK heading into the meeting. The currency has suffered from Riksbank’ s very accommodative policy but we think the clock is running down on the central banks’ willingness to continue QE. Headline inflation is close to 1%, having previously been rooted at 0% for three years; this means Sweden is no longer flirting with deflation.

Only 3 of 16 forecasters on a recent Reuter’s poll expected the Riksbank to announce an extension of QE at this meeting, but 6 of 16 were projecting an extension to be announced in December. Any indications at this meeting that QE is unlikely to be extended could encourage some recovery in SEK from what we view as very cheap levels vs. the EUR.”