SEK flows: SEK edges lower after softer CPI

This morning we have seen weaker than expected Swedish CPI data, triggering some modest losses in the SEK. The market is pricing 50bp of further easing from the Riksbank this year, and today’s data increases the chance it will come all in one go at the January 29 meeting. Forecasters are currently unanimous in looking for a 25bp cut at this meeting, but the market is pricing a 50bp cut as a 75% chance. We would still expect a 25bp move, in line with the ECB, and this should prevent any major impact on the SEK. EUR/SEK near 11.50 looks broadly fair based on current yield spreads.