HSBC go long NOK/SEK at SEK0.9770, target...>

SCANDIS: HSBC go long NOK/SEK at SEK0.9770, target SEK1.0250, stop SEK 0.9550.

- HSBC note that "given the uncertain outlook for risk appetite, relative value

trades provide better risk-reward for the time being. MonPol differences should

be enough to drive NOK/SEK higher from current levels, which are very low in a

historical context. The Riksbank's policy announcement today was more dovish

than exp. in a no. of ways. The central bank increased QE by SEK200bn, buying

into the middle of '21 & incl. corporate bonds in its purchases. It also

downgraded growth & inflation forecasts notably, and its projection for policy

rates is now to stay at zero thru Q323. Prev. had seen a possibility of a rate

rise in '22. The Riksbank did not rule out moving rates into -ve territory again

if justified. This combination should weigh on the SEK. The Norges Bank has been

much more hawkish. Although it has cut rates to 0%, it has seemed to rule out

cuts into -ve territory, in part due to its broader mandate re: financial

stability. The Norges Bank still sees the policy rate rising over the next

couple of years. The Norges Bank also announced yesterday that in July it would

sell FX worth ~US$230mn/day (NOK2.5bn) vs. US$210mn in June."