Currently, our short-term financial model indicates that the NOK/SEK is very overbought, trading more than 2.4 standard deviations above the model's fair value estimate of 1.098 (pages 3 and 7). On top of the strong short-term selling signal, we expect Swedish CPI inflation to edge closer to the Riksbank's inflation forecast tomorrow, which could ease some of the pressure on the Riksbank to cut and thus temporarily support the Swedish krona. Given the strong selling signal from our models and a negative outlook for the NOK/SEK on the very short horizon, we have decided to take an early profit on the long NOK/SEK position that we recommended to enter via a 3M bullish seagull in FX Market Update on 14 May. We close the strategy and book a profit of 0.62% (spot ref.: 1.1160).
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