SEK: EURSEK Off YTD Highs Alongside Energy, Vols Bid Ahead Of Riksbank Tomorrow
* EURSEK has moved away from YTD highs alongside energy prices over the last week. Topside was contained by the July 2025 high of 11.3320. Pullbacks are considered corrective for now though, with supports at the20-day EMA (11.2038) and 50-day EMA (11.1186) untested. * Overnight vols are bid ahead of tomorrow's Riksbank decision, pushing the breakeven on an ATM straddle expiring at tomorrow's NY cut to 0.35%. On the downside, this would bring 20-day EMA support into play. * The Riksbank is unanimously expected to hold to policy rate at 1.75%, though the updated September MPR rate path is likely to see a modest upward revision. Initial focus will be on the implied likelihood of a hike this year. * For FX markets, it will be interesting to see whether the weaker exchange rate plays an important role in the Executive Board's deliberations. The KIX effective exchange rate is currently 122.1, and has averaged ~120 this quarter - both comfortably above the Riksbank's June MPR forecast of 117.7. The index has risen 6% YTD, indicating a weaker SEK. * Wide foreign rate differentials have been one important driver of SEK weakness this year. Following ECB and Fed hikes in September (alongside
* EURSEK has moved away from YTD highs alongside energy prices over the last week. 3320. 1186) untested. 35%.
On the downside, this would bring 20-day EMA support into play. 75%, though the updated September MPR rate path is likely to see a modest upward revision. Initial focus will be on the implied likelihood of a hike this year. * For FX markets, it will be interesting to see whether the weaker exchange rate plays an important role in the Executive Board's deliberations.
7. The index has risen 6% YTD, indicating a weaker SEK. * Wide foreign rate differentials have been one important driver of SEK weakness this year. Following ECB and Fed hikes in September (alongside hawkish guidance), there is likely increasing pressure on the Board to ensure rate differentials with major trading partners don't widen further in the coming months and increase upside risks to imported inflation via the currency.
The current Riksbank-ECB rate spread of -75bps is an all-time low. Figure 1: EURSEK Since 2022