SEK flows: EUR/SEK only marginally higher after Riksbank leaves rates unchanged

Little reaction to the Riksbank decision to leave rates unchanged, which was broadly expected, with the Riksbank continuing to indicate that there is scope for a further cut this year, in line with the June monetary policy report. The statement notes that “The Riksbank considers that the outlook remains largely unchanged, even though inflation and economic activity have deviated somewhat during the summer from the Riksbank’s forecast in June”.  The market is currently pricing in another 20bps of easing by the end of the year, taking the policy rate to 1.8%, which is broadly consistent with the June Monetary Policy report. EUR/SEK initially edged up on the decision but is only marginally higher at 11.19. We still see scope for some further gains, given the SEK’s outperformance this year, but this may require some evidence of a weaker EUR against the USD as the SEK tends to act as a super-EUR in USD negative environments.