Research Team at Lloyds Bank, expects the Swedish Riksbank to cut its policy rate by 10bp this week, the latest G10 central bank to respond to Q1 deflationary impulses with additional easing.
Key Quotes
“While Swedish activity has held up well, the Riksbank is wary of low inflation readings and is likely eager to pre-empt any exchange rate impact from an expected further ECB easing in March. EURSEK may push higher again if easing is delivered but we would continue to fade moves above 9.50 in the cross as the Riksbank is likely rapidly approaching the limits of its capacity to match ECB easing going forward. We remain positioned for an eventual break below 9.00 in EURSEK via a derivatives recommendation expiring in August.”
(Market News Provided by FXstreet)