Policy to continue weighing on krona, but watch positioning
Within the minor currencies, the krona appears most at risk of more easing. The Riksbank was close to moving at the last meeting and one ‘better’ inflation number won’t change the outlook. Deputy Governor Ekholm warned that whilst the ‘marginally below forecast’ April inflation report was reassuring, ‘the last two readings have on margin ‘strengthened’ the case for a rate cut. We continue to see policy weighing on the krona, but the path lower is a difficult one as positioning is at extremes.
Read the full report: UBS