Target 9.25, stop 9.60, entry 9.4960
We still see 9.50 in EUR/SEK as a line in the sand for the market. The recent
move lower in the broad SEK TWI sees it 2% cheap to the July MPC forecast
even after downward revisions at that meeting. Sweden data surprises are at
their lows – this tends to be a mean reverting time series and tracks near-term
moves in EUR/SEK (chart 1). Positioning is lighter – speculators have sold SEK
consistently since the start of June (chart 2). This week better than expected
employment/GDP/manufacturing confidence data could catalyze a move lower.