Strategy: Receive SEK 1Y1Y, Hedge By Short Position In EURSEK

Published 04/25/2018, 08:07 AM
EUR/SEK
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Our call for tomorrow's Riksbank announcement is that it will delay the first rate hike by two quarters to Q1 19, based on the fact that inflation has failed to live up to expectations. In the meantime, we observe that the krona remains weak with EUR/SEK around 10.41 versus c.10.30 by mid-April, while 1Y1Y SEK versus EUR has moved up from +5bp (April 18) to +9bp currently (SEK 1Y1Y from 0.02% to 0.09%). Market pricing is currently fairly aligned with a scenario where the Riksbank postpones the first hike by one quarter (rather than two, as we suspect).

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