ECB QE has started off at a strong pace, and its effects on the smaller European economies, such as Norway, Sweden and Switzerland continue to be felt as the respective central banks evaluate the course adjustments needed to keep pace.The level of the currency is important for both Riksbank and Norges Bank, albeit for different reasons· The scale of ECB QE puts upward pressure on both NOK and SEK vs EUR, in turn increasing the pressure to keep pace with ECB.Rapid appreciation increases possibility of additional easing, but in the medium term both currencies will appreciate vs EUR“In the medium term, we expect that ECB QE will result in both NOK and SEK strength relative to EUR. Neither bank is done with easing, but we believe they will struggle to match the pace of the ECB. In both cases rapid strengthening is likely to be met by central bank action.” – notes BofA Merrill Lynch in a report on Monday.

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