EUR/NOK seen higher, EUR/SEK rangebound – Danske Bank

In view of Morten Helt, Senior Analyst at Danske Bank, NOK is seen weaker by year-end, while SEK is expecting to remain within range vs. its European peer.

Key Quotes

“In the Scandies, this week will bring the three-monthly inflation prints. The set starts off with Norwegian inflation tomorrow morning. Our call is for a rise in the yearly core rate to 1.2% among other things driven by a rebound in food prices”.

“If our call proves right, it would be in line with not only consensus but also Norges Bank’s projection, which should therefore have limited NOK impact. Having said this, we think the balance of risk is to the upside for inflation. Hence, were we to get a stronger-than-expected print, this might be our opportunity to add a bullish EUR/NOK position going into year-end”.

“Later tomorrow, we will get the Danish print, which will have no effect on EUR/DKK. Meanwhile, the Danish release could shed some light on subcomponents influencing our call on Swedish inflation due to be released on Thursday. For now, our base case is a rise in Swedish CPIF to 2.5% y/y, which would be in line with consensus but 0.1pp above the Riksbank’s projection. Tactically, we still regard EUR/SEK as a 9.40-9.65 range play and like volatility selling strategies in the option sphere”.