Overall, in the Scandi FX volatility sphere, few changes from last week. Two-week USD/SEK and USD/NOK volatilities are slightly higher as this tenor now covers the US midterm election.
The modest event risk priced on this week's meetings of the Riksbank and Norges Bank is fair, in our view. We expect the Norges Bank meeting in particular to be a non-event.
We have changed our call on the Riksbank and tactically we like to sell EUR/SEK on rallies. See FX Essentials 6 Sell EUR/SEK on rallies , 22 October.
In the FX option space, this view can be exploited by selling EUR/SEK calls (we favour the 2W-1M segment) or by entering 2-3M bearish seagulls.
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