Swedish inflation figures to be pivotal for Riksbank’s policy decision on 21 Dec

Inflation figures in Sweden are due to be released on Tuesday and will be closely watched as they might have a major influence on the Riksbank's policy decision on 21st December. The Riksbank has slashed interest rates to a record low of -0.50 percent and launched a large-scale quantitative easing programme in a bid to revive inflation.

On account of the recent weakening of the SEK and a rise in oil prices, overall CPI inflation numbers are likely to see a pronounced uptick, but 'core' measures such as CPIF which excludes energy are expected to remain more subdued.

"Our estimates for November CPIF and CPIF excluding energy are 1.56% y/y and 1.21% y/y, respectively. This is 0.15pp and 0.17pp below the Riksbank’s corresponding respective estimates and implies that the difference compared with October remains”, said Danske Bank in a report.

The Swedish Krona is expected to remain under pressure in light of the release of key data and the Riksbank. EUR/SEK could spike higher temporarily in the event of a rate cut, while no cut would be fairly neutral for EUR/SEK.

FxWirePro's Hourly Currency Strength Index at 1200 GMT showed EUR strength was at -96.4879 (Slightly bullish). For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.