August CPI Expected To Slow (1/2)

Swedish CPI for August is due on Thursday morning, the most important datapoint before the Riksbank decision on September 21.

• In its June Monetary Policy Report, the Riksbank expected August CPIF to be 4.8% Y/Y (and CPIF ex-energy to be 6.92%). CPIF consensus is seen at 4.9% Y/Y, while the CPIF ex-energy consensus is stronger than the Riksbank at 7.4% Y/Y.
• These forecasts represent a noticable step down from July levels, where CPIF was 6.4% Y/Y and CPIF ex-energy was 8.0% Y/Y.

While a 25bps hike from the Riksbank next week is almost certain, tomorrow's release will allow markets to re-assess expectations for the November meeting (and beyond).

• An upside surprise to August inflation could offer some welcomed reprieve for the SEK, which has depreciated almost 5% against the EUR since mid-July.
• Key EURSEK supports are currently 20-day EMA at 11.8777 and 11.7950 - the Aug 30 low.
• A downside surprise may re-open 11.9633 (Aug 21 high and all-time high), a level which could also be tested should the ECB deliver a hawkish surprise tomorrow.