Swedish Krona: Riksbank outlook supports SEK against Euro – Rabobank

Rabobank's Senior FX Strategist, Jane Foley, discusses the EUR/SEK exchange rate, emphasizing Sweden's robust economy and a recent hawkish shift by the Riksbank. She points out the positive impact of fiscal support measures, a low national debt level, and the possibility of a November rate increase on the Swedish Krona (SEK). Foley predicts that EUR/SEK will return to the 11.00 mark within the next three months.

Recent better-than-expected GDP data and the increasingly hawkish stance of some Riksbank officials have led to refined expectations of interest rate hikes. The market is now fully priced for a 25-basis-point tightening in the next quarter. In September, Sweden's central bank governor Seim expressed support for a rate rise at the November policy meeting, while Governor Thedeen suggested that a rate increase would be "reasonable."

Thedeen stated in a recent speech that raising the policy rate as early as November is reasonable and possible, although there is considerable uncertainty. Given these factors, the SEK appears to have the potential to regain some ground against the EUR. Near-term, the 50-day simple moving average at the EUR/SEK11.16 level is acting as support, and a breach below this could indicate a move to the 11.07 level.

The FXStreet Insights Team, composed of journalists, has reviewed this market observation, handpicking insights from renowned experts.