The SEK’s high beta status and macro challenges have led the EUR/SEK cross higher over the past month.  Economists at CIBC Capital Markets discuss the pair’s outlook.

Core prices likely to remain sticky

When it comes to the Riksbank, we’re sticking with our call of another 25 bps hike on June 29th. While real estate remains a residual drag, we don’t expect that to deflect the Riksbank from the primacy of bringing CPI back down to target.

The macro picture in Sweden remains strong, while price pressures are likely to remain sticky. Retail sales have rebounded, while the unemployment rate has retreated for the third time in four months. At the margin, this supports our call for a EUR/SEK reversal into H2. 

EUR/SEK – Q3 2023: 11.35 | Q4 2023: 11.20