Nordea’s Henrik Unell maintains a constructive stance on the Swedish Krona, arguing that carry should be secondary to growth prospects and equity flows. After a war-driven spike in EUR/SEK and USD/SEK, improved sentiment, a steady Riksbank, and ongoing rotation from US to Swedish assets by households underpin expectations that SEK fundamentals will recover.

Sentiment, Riksbank stance aid SEK

"So far we haven´t changed the main story or the forecast for the SEK as the war has hopefully plateaued."

"Now that investor sentiment has recovered, we expect that macro fundamentals will do the same."

"The Riksbank will stay on hold for the rest of the year unless geopolitics throws another curveball and the situation escalates."

"The fact that monetary policy and the Riksbank are not acting preemptively or sounding alarm bells because gasoline prices are up should eventually benefit households."

"We believe that the lack of yield support is secondary to growth and equity flow data confirms that households continue to sell US assets and buy Swedish ones."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)