With EUR/SEK back above pre-Riksbank meeting levels, economists at Credit Suisse leave their EUR/SEK target at 10.60. Markets will likely wait to see whether upcoming local data validates hawkish priced-in policy expectations: as a result, 10.60 may come into play only later in Q2. 

The target of 10.60 restated

“We think the market is sceptical that there is room for SEK to benefit from the Riksbank’s hiking cycle. This is likely because the market’s priced-in policy expectations, which currently reflect about nine more 25bp rate hikes by end of 2024, continue to look excessively hawkish relative to Sweden’s macro backdrop. 

“We continue to think a 10.60 EUR/SEK target appropriately weighs the risks for SEK.” 

“We look for CPI data on the 12 May, and quarterly GDP data on 30 May to potentially shift the narrative in favour of further EUR/SEK upside. The true test will come from the 30 Jun Riksbank decision.” 

“EUR/SEK rallies towards 10.60 can become a more convincing proposition towards the end of Q2.”