Data Schedules:
Today, Swedish GDP (Q1) data have shown slowed numbers, prints at 0.5%, down from an impressive 1.9% in Q4 to miss the consensus looking for 0.7% q/q.
Riksbanker Jochnick to speak on the outlook for the housing market (Thursday) –
Industrial production and manufacturing orders (Friday) – PMI manufacturing (Wednesday) and services (Friday).
Trade & Hedging Perspectives:
EURSEK saw a sharp repricing last Tuesday, close to 9.35. Currently trading 9.2681.
Riksbanker's speech shows confidence in SEK weakness and surprising focus on avoiding a too quick strengthening of the SEK.
Unemployment data surprisingly solid, after some months of sideways unemployment.
Employment growth picking up as well. Numbers sent the SEK soaring.
The 3 months interest difference (SEK-EUR) has fallen 1bp over the last week.
SEK 2017 FRAS fell 0-1bp last week, while similar EUR FRAs were down 1-2bps.
Our forecasts are 9.25, 9.00 and 8.70 in 1, 3 and 12 months.
We recommended buying a 2M EUR/SEK ATM put option financed by shorting a 2W EUR/SEK 9.40 -9.17 strangle.
We see limited short-term upside potential for the SEK in the near month as 1M EUR/SEK implied volatility is extremely lower and with the theta risk (i.e. time decay) would likely to shrink away as there is downside potential currently. Limited upside risks to EUR/SEK keeps theta becoming cheaper.
The material has been provided by InstaForex Company – www.instaforex.com