Solid sentiment in Europe should support SEK - BNPP

Research Team at BNP Paribas, expect the preliminary PMIs for the Eurozone and the German IFO indicator to hold up at relatively solid levels, continuing to show limited impact from the UK referendum result on the Euro area economy.

Key Quotes

“The data will do little to drive markets towards pricing greater chance of further ECB easing, but we think the EUR is unlikely to benefit much against a backdrop of continuing ECB QE.

The SEK remains our preferred currency in Europe and we think evidence that activity in the core of the euro area is holding up well should be supportive for this manufacturing oriented economy and its currency. Our economics team expects steady policy from the Riksbank ahead, contrary to market pricing for a small chance of further rate cuts. We remain short EURSEK in our recommendations portfolio from 9.53 targeting 9.20. Sweden also releases manufacturing confidence data this week on Thursday.”