In the June survey respondents from Sweden, Finland, Denmark and Norway gave their views on ECB bond buying, the Riksbank's repo rate and stock market performance for the remainder of 2017. They also provided their 3-month (25 September) forecasts for EUR/SEK, EUR/NOK and EUR/USD.
EUR/SEK. Clients foresee a 1% appreciation of the SEK vs the EUR, projecting 9.65 in 3M. Norwegian clients are clearly more bullish than the rest, whereas Finnish institutions see the pair going a little higher. Swedish institutions are also relatively bullish on the SEK.
EUR/NOK. There is quite a widespread bullish consensus on the NOK as clients see a 1.5% appreciation of the NOK vs the EUR. Norwegians and Swedish institutions see more downside than the rest. Meanwhile, Danes and Finnish institutions expect the pair to stay more or less flat at these levels.
EUR/USD. Clients expect the pair to stay relatively flat over the summer, having a forecast that is only marginally below current level. Here we detect some sort of home bias, where Finns are the only EUR-bullish category. Interestingly, only one respondent expects USD/SEK to trade above 9.00 and only one sees it below 8.00. Three clients see USD/NOK below 8.00.
NOK/SEK. Clients on average think NOK/SEK will head slightly higher. Only three clients have submitted sub-parity forecasts.
ECB. 'Taper tantrum?' - a 60% majority expects the ECB to scale down its bond-buying programme when the current E60bn per month expires at the end of this year. A non-negligible number of respondents (13%) actually expects the ECB to stop completely as of January 2018. Only 5% expect an increase. The result, a foreseen 'tapering', could be part of the reason why clients do not expect EUR/USD to turn decisively lower even though the Fed is in tightening mode.
Riksbank. 'Low for long' - clients seem to have accepted the Riksbank's message. A 58% majority of respondents expect the repo rate to rise to zero or above no earlier than 2019. This compares with the Riksbank's own forecast which is that it will start to lift rates in Q3 18 and breach zero in Q3 19. Within that majority, 7% expect the Riksbank to keep rates below zero until 2020 or beyond that. This may help to explain why clients have adapted to continued SEK weakness (modest rebound is expected) and that 20% of the respondents see further depreciation.
Stock market. 'More Bulls than Bears' - 40% of respondents are bullish on the stock market for the remainder of this year, thus holding the view that the positive trend will continue. Only 24% are bearish, thinking that equities will end this year at lower levels than today. One third is neutral.
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