SEK: Moving into a more negative regime – Nomura

The ‘old’ regime, where SEK was one of the favourite longs in the G10, is coming to an end, suggests the analysis team at Nomura.

Key Quotes

“Underpinning this regime were four fundamental views: 1) above-trend growth, 2) an advanced stage in the economic cycle, 3) rising inflation and 4) a long and drawn-out hiking cycle ahead. We believe there are strong grounds for questioning each of these as Sweden moves towards a late-cycle position. This suggests a short-lived Riksbank hiking cycle and further SEK underperformance. We re-enter NOK/SEK longs, looking for a move to 1.14 by end-September.”