SEK flows: SEK lower after Riksbank cut
Riksbank cut rates as most expected, and guide for 2 more cuts this year. SEK lower, but remains at low levels and has scope to rally.
The Riksbank have cut rates as the majority expected, triggering a 0.5% rise in EUR/SEK, as there was a minority opinion seeing no change. The Riksbank indicated that he policy rate was expected to be cut twice more in H2, and while they say this is in line with the March forecast, the March forecast didn’t include a May cut, so it does look as if there has been a dovish shift. Nevertheless, front end yields have only fallen modestly, and the SEK’s decline has also been modest. EUR/SEK continues to look on the high side given current yield spreads, and we favour the downside from here with the ECB likely to produce similar cuts to the Riksbank this year.
