Jan 5 (Reuters) - Despite trading in a steadier range versus the euro through late December, the Swedish crown remains under pressure and is likely to lose the Riksbank's hawkish support as domestic inflation expectations start to ease.
We expect to see the Riksbank hike its key rate by 50 bps to 3.00% at its February policy meeting and then for rates to be on hold for the remainder of 2023.
Much depends on the European Central Bank's policy stance. The ECB is widely expected to approve a a 50-basis-point rise next month and the crown will then be vulnerable to further tightening of eurozone rates.
Swedish December inflation data is due for release on Jan. 13 and forecasts are mixed. The Riksbank is looking for a fall in CPIF to 9.1% year-on-year from 9.5% in November, while some market analysts are expecting an unchanged return.
EUR/SEK peaked at 11.1945 on Jan. 2, a high point since the 11.4155 spike in March 2020. There are bearish pointers on the daily chart, but the line of least resistance is to the topside.
For more click on FXBUZ
EUR/SEK daily candle chart: https://tmsnrt.rs/3GGrk1H
Swedish CPIF chart: https://tmsnrt.rs/3QitDLB
(Peter Stoneham is a Reuters market analyst. The views expressed are his own. Editing by Mark Heinrich)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.