This week, EUR / SEK hit the lowest level since April 2019, currently at 10.41, and is expected to find support at 10.40 as the Swedish economy faces a lot of gloomy economic news, by Rabobank .
While borders have reopened in the region, Sweden’s neighbors maintain controls over the Swedes. This could hamper the ability of the small open economy to rebound. In addition, Sweden’s high mortality rate suggests that attendance may remain low, with consumers being able to remain cautious for longer. “
“The second quarter should largely show that the economy has not avoided a severe blow from the pandemic. Over the whole year, the Swedish government estimated that the economy could contract by around 7% while the Riksbank indicated a contraction of 7% to 10%. “
“In terms of monetary policy, the Riksbank considers its balance sheet as a key tool. All members supported the decision to leave rates at zero in April, although the door for a possible return to a negative rate remained open. The next policy announcement is scheduled for July 1 and a similar approach to policy is likely, with the balance sheet remaining to be favored over another rate cut. “
“Given the negative projections for the Swedish economy and the likelihood that the Riksbank will highlight an accommodative political position next month, we expect the EUR / SEK 10.40 zone to provide support.”