EUR/SEK: Rallying on a cut – Danske Bank

Danske Bank economists stick to the non-consensus call that the Riksbank will cut the repo rate by 25bp to minus 0.25%. The market is pricing a 35% probability of that happening. EUR/SEK trades at 10.856. 

Key quotes

“We expect the Riksbank to cut rates back to -0.25% (from currently zero) at today’s meeting. This is a non-consensus call and the market is currently pricing in -8bp.”

“EUR/SEK should rally on a cut and possibly re-test 11.00 within the next sessions.” 

“Admittedly, it is a close call though and if the Riksbank opts for unchanged, SEK will most likely go stronger, even if the market response should be smaller as long as the door for a rate cut later on is not closed.”