As the market anticipates another rate cut by the Riksbank at tomorrow’s policy meeting, it is important to note the potential impact on the EUR/SEK exchange rate. The results of a recent survey show unanimous expectations for a 25 bps easing, highlighting the significance of this decision in the financial market.
EUR/SEK Trading at Average Levels, Riksbank’s Guidance Key
The recent Swedish CPI inflation report and the Riksbank’s guidance in June have solidified hopes for a rate cut. Currently, the EUR/SEK exchange rate is trading close to its average level over the past year, indicating a certain level of stability. However, historical data shows that the SEK remains weak in comparison to previous years.
Given the softness of the SEK, policymakers are closely monitoring the decisions of the ECB and the Fed, as well as their impact on the FX market. The vulnerability of the SEK suggests that a 50-bps rate cut by the Riksbank this week is unlikely. However, the potential for Riksbank rate cuts to outpace those of the ECB later in the year has led to a revised EUR/SEK forecast of 11.50 for the next 3 months.
Looking ahead, there is a possibility of moderate appreciation of the SEK against the EUR next year, assuming that lower Riksbank policy rates stimulate the economy. This forecast highlights the interconnected nature of global financial markets and the importance of staying informed on central bank decisions.
Overall, the Riksbank’s upcoming rate cut and its impact on the EUR/SEK exchange rate serve as a reminder of the interconnectedness of global financial markets. Stay informed and be aware of how central bank decisions can affect your investments and financial decisions.