FXStreet (Edinburgh) – Senior Analyst Christin Tuxen at Danske Bank, expects pullbacks in the cross to be limited for the time being.
Key Quotes
“EUR/SEK spiked sharply following the Riksbank decision to cut the repo rate 10bp to – 0.35% and to add another SEK45bn in nominal government bonds purchases when the current programme ends in September”.
“The policy action supports our view that EUR/SEK downside remains capped”.
“However, we view the monetary policy surprises, which are clearly targeting the exchange rate, as likely to have a diminishing impact on the SEK, precisely because the surprise element is fading”.
“In fact, we believe that a ‘wall of money’ is about to enter Sweden, not because of Greece-related uncertainty but because the SEK is cheap and is viewed as such by investors”.
“Near term EUR/SEK should trade in a 9.20-9.40 range, with the threat of further monetary policy actions capping the downside and rising Swedish growth expectations and ECB QE capping the upside”.
(Market News Provided by FXstreet)