FxWirePro: does growth divergence lead to policy divergence in scandis? – stay short in DKK/SEK to mitigate currency divergence risks
ソース: FxWire Pro - Insights & Views / 02 5 2016 08:38:17 America/New_York
The Swedish economy advanced a seasonally adjusted 1.3% on quarter in the three months to December of 2015, following an upwardly revised 1% growth in the previous period and beating market expectations of 0.7%. It was the fastest growth rate since the fourth quarter of 2010, as both domestic and external demand contributed to growth.
While, the Danish economy advanced 0.1% on quarter in the last three months of 2015, rebounding from an upwardly revised 0.6% contraction in the previous period but lower than initial estimates of a 0.2% expansion
The growth divergence will be reflected in a fall to 1.10 over time. The Swedish economy is expected to see 3.5% GDP growth this year, marginally down from last year’s 3.8% but still on a different level from the rest of Europe.
On the contrary, in Denmark, where a consensus forecast of 1.6% growth may be optimistic, at least judging by the finance ministry’s revision to 1.1%.
As rising oil prices push headline inflation slowly back up in Sweden, how long can the Riksbank policy of negative rates last against this kind of growth backdrop?
While EUR/SEK’s further gradual fall is projected as the stress on the Riskbank is developed.
Meanwhile, the EUR/DKK link, remains in place and is not under pressure, but growth divergence could put it under some pressure.
Risk profile: Risks Risk aversion, housing market slows sharply in Sweden Global risk aversion tends to cause SEK to weaken relative to EUR, so this trade will work badly in a major sell-off.
The longer the Riksbank keeps policy too easy, the greater the risk that eventually, the housing boom becomes unsustainable.
Look for drift to DKK/SEK 1.20 near term, 1.10 over 18 months.
At spot ref: 1.2337, stay short in DKK/SEK futures contracts of far month expiries.
3-month target 1.20, 18-month target 1.10, stop 1.2550.© FxWire Pro 2020. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.