Riksbank Preview: QE extension likely - Nomura

Research Team at Nomura, expects likely QE extension in the forthcoming Riksbank meeting and also expects the SEK strength to resume after meeting.

Key Quotes

“The Riksbank’s QE programme is currently scheduled to finish at the end of June. Next week’s meeting is the board’s last opportunity to expand the QE programme at an official meeting (6 July is the following meeting). Failure to extend QE would be viewed as a clear signal that the Riksbank is becoming less concerned about weak inflation and SEK appreciation, which would likely see SEK strength accelerate.

With the inflation recovery still in its early stages, we expect the Riksbank to want to avoid this and signal it is still active by extending QE. If EUR/SEK were to reach 9.25-9.30 on the QE announcement, we would consider re-entering EUR/SEK short positions as we do not think QE extension would be enough to alter the recent trend in EUR/SEK.”