EUR/SEK to rise by year-end

As the Sweden's 2016 collective wage negotiations come into sharper focus in coming months, so will developments in inflation. Over the past decade and a half, pay settlements have generally risen in excess of inflation by ~0.4ppts.

The last round of negotiations in 2013 ended with an agreement for wages to rise 6.8% over three years (or ~2.3% per year). In the three years since, headline inflationhas fallen to 0%. 

"While CPI remains low, the asymmetry of risk towards potentially more easing suggest greater upside risk for EUR/SEK and the pair is seen rising to 9.60 by yearend 2015 and Q1 2016 before gradually grinding back lower once the inflation target has been reached", says RBC capital markets.