11 Apr 2014
SEK faces increasing downside pressure – Rabobank
FXStreet (Edinburgh) - According to Jane Foley, Senior Currency Strategist at Raboabank, the Swedish krona faces more weakness amidst prospects of rate cuts by the Riksbank.
Key Quotes
“By lowering its expected path for the repo rate earlier this week, the Riksbank clearly indicated that it was contemplating another policy move and this view was driven home by yesterday’s very soft CPI inflation release… That said, further stimulus may be necessary to beat deflation and the market is now focusing on another Riksbank rate cut most likely in the next policy meeting on July 3”.
“While the case in favour of a July rate cut appears compelling, another move still carries risks. In its policy statement earlier this week, the Riksbank commented that ‘household debt as a share of income is expected to rise somewhat more in this forecast than was expected in February’”.
“In the weeks ahead, another rate cut from the Riksbank threatens to weigh on the SEK vs. the EUR… We are targeting the Dec high near EUR/SEK9.0986 initially, beyond may open the way to a return to the 2012 highs near EUR/SEK9.17”.
Key Quotes
“By lowering its expected path for the repo rate earlier this week, the Riksbank clearly indicated that it was contemplating another policy move and this view was driven home by yesterday’s very soft CPI inflation release… That said, further stimulus may be necessary to beat deflation and the market is now focusing on another Riksbank rate cut most likely in the next policy meeting on July 3”.
“While the case in favour of a July rate cut appears compelling, another move still carries risks. In its policy statement earlier this week, the Riksbank commented that ‘household debt as a share of income is expected to rise somewhat more in this forecast than was expected in February’”.
“In the weeks ahead, another rate cut from the Riksbank threatens to weigh on the SEK vs. the EUR… We are targeting the Dec high near EUR/SEK9.0986 initially, beyond may open the way to a return to the 2012 highs near EUR/SEK9.17”.