Risk bank’s move and risk reward favors buying dollar against Krona

Though 88% of the economist expected a wait and watch move from Swedish central bank, risk bank surprised then with a 10 basis points rate cut and additional 45 billion purchase of bonds.

• Today's move might have surprised market participants, but it seems very much likely that Risk bank will continue its easing since inflation is still very low around 0.1%.

• Today's move by Risk bank has brought down the main refinancing rate to -0.35%.

• It will also purchase additional securities worth SEK 45 billion, which will begin in September and will be completed by end of year.

Next decision is scheduled on September 3^rd, 2015.

As dollar seems to be returning to focus on monetary policy divergence, risk-reward favors buying dollar against Krona.

Trade recommendation -

• Buy USD/SEK at current level with stop around 8 and target around 9.2 as first and around 10 as second. Averaging the trade with dips buying is recommended.

As of now Dollar is trading at 8.43 against Krona.