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The Swedish Krona (SEK) has weakened forward of Riksbank’s coverage assembly on Wednesday. Economists at MUFG Financial institution analyze SEK outlook.
Riksbank to offer dovish coverage steerage that would tee up a fee lower as quickly as Might
We’re recommending a brand new lengthy EUR/SEK commerce thought. The primary rationale for the commerce thought displays our expectation that the Riksbank would be the subsequent European central financial institution to start slicing charges which we count on to encourage a weaker SEK within the coming months.
Whereas we don’t count on the Riksbank to decrease charges at Wednesday’s coverage assembly, the up to date coverage steerage ought to open the door to the primary fee lower being delivered as quickly as on the following assembly in Might.
There are two predominant dangers to the commerce thought: i) the Riksbank proceeds extra cautiously given ongoing considerations over SEK weak spot, and ii) the worldwide financial system and Sweden’s financial system begin to recuperate extra strongly than anticipated this 12 months offering extra assist for SEK. We see solely a restricted threat that the ECB begins to chop charges earlier in April somewhat than in June.
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