SEK: Re-weakened by the Donald – Nordea Markets

Analysts at Nordea markets explain that last week they entered a EUR/SEK short in their tactical convictions, but the position has so far failed to perform, as Donald Trump’s new set of tariffs re-weakened the SEK.

Key Quotes

“We still judge that the Swedish surprise index has a large probability of rebounding compared to other G-10 surprise indices. This is usually positive for the SEK vs. the EUR. But if the market continues to focus on the trade war risks; this is an obvious risk to the view of lower EUR/SEK short-term.”

“The amount of trade war stories is a parameter that can explain why EUR/SEK has moved out of sync with various rates spreads, as the Swedish economy is obviously vulnerable to a slowdown of global trade. Hence, there is likely a relief correction lower to be seen, if the tensions between US and China abate. We stick to our short EUR/SEK conviction, but monitor the upside very closely. Levels above 10.25 look scary from a technical perspective.”