Thursday, October 29, 2015

Riksbank Review: Larger-than-expected QE expansion - Nomura

FXStreet (Bali) - The Riksbank remains dovish as concerns over SEK appreciation remain high, notes the Research Analysts Team at Nomura.

Key Quotes

"The Riskbank announced additional government bond buying into H1 2016, saying it will purchase another SEK65bn of government bonds, which will increase its share in total outstanding to 26% or higher."

"Although the Bank left the repo rate unchanged, the repo rate path was lowered further, suggesting a high possibility of a near-term rate cut and extended period of negative rates."

"We see a high possibility of a 10bp rate cut in December, while further QE extension should be announced in Q1 2016. We judge the more dovish policy package reflects the Riksbank’s strong concerns about SEK appreciation, and we expect SEK to keep trading weakly."

"For now, we are booking small profits from EUR/SEK call spreads positioned into the ECB and Riksbank meetings, but we continue looking for better entry points for renewed SEK short positions."
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