Riksbank can afford to be more relaxed

Sweden economy is doing well, as data on consumer and company confidence confirmed yesterday and EUR-SEK traded at 6-month highs yesterday. That means the krona is moving in the direction Riks-bank would like it to: it is weakening. Which looks even better against the backdrop that any notable inflation pressure as a result of positive economic developments hasn't shown up yet. On the contrary: the low oil price has even caused inflation expectations to fall short term with the market seeing a possibility that Riksbank might cut interest rates again next week as a result, says Commerzbank. 

However, we assume that Riksbank will take its time and will not take action before October as the krona is easing. Only an unexpected appreciation of the krona would force Riksbank to take action at the moment. The economic data due for publication in the coming days (retail sales and PMI) will not cause a significant appreciation of the SEK. If uncertainty on the markets remains elevated it will be the 9.70 mark in EUR-SEK that will be more of an issue, added Commerzbank.