EUR/SEK set to move downward as Riksbank poised to hike – Danske Bank

The Swedish krona has seen support from a repricing of the Riksbank. With the outlook for Riksbank rate hikes, analysts at Danske Bank expect EUR/SEK to move lower forecasting the cross at 10.10 in six months.

Monetary policy in the driver’s seat

“Eyes are now on the Riksbank’s 28 April decision. We expect the first hike at the June meeting (previously September). Such an outcome should be relatively neutral (slightly positive) for SEK. April is possible though less likely in our view: if materialised, it should send EUR/SEK sharply lower.” 

“A baby step revision to 2023 seems even more unlikely. If so, EUR/SEK should move sharply higher – it is hard to see that would be in the RB’s interest given the already strong upward pressure on import prices. Markets would probably not buy into that scenario, i.e. pricing will continue to be ‘ahead of’ the RB, which at the end of the day puts a cap on the upside in EUR/SEK.”

“Medium-term, a bleaker growth outlook and risk of US/global recession, puts a cap on the downside – as does already aggressive RB pricing.”

“Forecast: 10.30 (1M), 10.20 (3M), 10.10 (6M), 10.20 (12M).”