BUZZ-COMMENT-If Riksbank maintains its stance, SEK should rise
Sep 22 (Reuters) - - An increasingly risk-averse market dragged on the Swedish crown Tuesday, but if the Riksbank backs up its rhetoric, the SEK should outperform the EUR. The concern might be that the latest chapter in the COVID-19 story forces the Riksbank to deviate from its zero rate path.
Increased infection rates in Europe and threats of further economy-crippling lockdowns have injected caution into the forex market.
The Riksbank announced today that monetary policy would be left unchanged and that quantitative easing would continue at its current pace. But there is a sense that the bank is beginning to move away from crisis levels, and by revising up its GDP estimates has underlined this position.
To keep its options open, the Riksbank has left the rate-cut door open but maintained a zero rate path for the forecasting period.
If significantly lower Swedish inflation expectations are seen and Europe is forced to weather a second COVID-19 storm, there remains scope for negative Riksbank rates and pressure on the SEK.
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EUR/SEK daily ichimoku chart: https://tmsnrt.rs/3cmFWCP
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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