SEK between the Riksbank and elections – Danske Bank

Christin Tuxen, Chief Analyst at Danske Bank, gives her view on the upcoming risk events facing the Krona.

Key Quotes

“It is a key week for the SEK. First up: the Riksbank on Thursday. Our base case is that it lowers the probability for a Q4 rate hike, which now indicates c.10bp for October or c.20bp for December. The money market is pricing 10bp through year-end but even though it is on the dovish side, we expect a negative reaction in the SEK. We think the knee-jerk downside potential is bigger if, instead, it sticks to the current rate path”.

“Next up: the general election on Sunday. It has been on investors’ radar for the past couple of weeks and is now arguably well reflected in SEK options and spot prices”.