SEK: Don’t go chasing EUR/SEK highs - ING

Swedish 4Q GDP data today comes at a crucial time for the krona, with EUR/SEK reaching a fresh 8-year high yesterday and now firmly trading above the 10.05 level, suggests Viraj Patel, Research Analyst at ING.

Key Quotes

“ING’s Jonas Goltermann is looking for a slightly below consensus print of 0.8% QoQ (cons: 1.0%) – which could see a knee-jerk move higher in EUR/SEK towards 10.08-10.09. But in the grand scheme of things, we suspect investors will still view this as a decent GDP release and therefore we may need to see a bigger negative surprise for a beaten down SEK to sustainably weaken further from here.”

“On the flip side, any small positive GDP surprise – or confirmation of a strong Swedish economy – could see SEK pare some of its recent inexplicable losses. Risk-reward doesn’t favour chasing momentum-driven moves higher in EUR/SEK at such elevated levels. Governor Ingves also speaking later (1700 CET).”