SEK: Riksbank likely on extended hold – Nomura

💡 DMK Insight

Swedish inflation’s recent undershoot is a red flag for traders, but energy price volatility could flip the script. For four consecutive months, inflation has fallen short of expectations, which could lead to a dovish stance from the Riksbank. This is crucial for forex traders, especially those holding SEK positions. However, the ongoing conflict in Iran is stirring energy prices, potentially reversing the trend. If energy costs spike, it could reignite inflation fears, prompting a shift in monetary policy. Traders should keep an eye on the correlation between energy prices and SEK, as a sudden rise in oil could lead to a rapid revaluation. Here’s the kicker: while the mainstream narrative focuses on inflation, the real story is how geopolitical tensions can create unexpected volatility. Keep an eye on energy futures and any announcements from the Riksbank, as they could signal a shift in market sentiment. Watch for key levels in SEK against major currencies, particularly if inflation data continues to disappoint or energy prices surge.