SEK flows: SEK firmer on strong GDP

Swedish GDP growth % y/y

EUR/SEK has dropped 3 figures in reaction to the provisional Swedish Q3 GDP data, which has come in significantly stronger than expected at 1.1% q/q and 2.4% y/y. The September monthly data actually showed a small 0.1% m/m decline, but a big 4.1% y/y gain due to base effects. The preliminary GDP data has been quite heavily revised in recent times, so we wouldn’t put too much weight on today’s data, but the underlying story is one of improving growth. EUR/SEK is already trading somewhat below the level suggested by the historic relationship with yield spreads, so downside progress is unlikely to be rapid, but the SEK does seem likely to retain an upside bias against the EUR.