Morgan Stanley Go Short EUR/SEK

Friday saw Morgan Stanley note that “the recent bout of SEK weakness has raised many eyebrows. While some have attributed it to the deteriorating growth outlook, exacerbated by high household debt and falling house prices in Sweden, we disagree.”

• “We maintain the view that the poor economic outlook is already largely in the price and think this was driven by a rise in yield differentials, a dynamic we don't expect to continue.”
• “Overall, on the back of already extremely short SEK positioning and better-than expected European (and global) growth, we remain constructive on SEK for this year and initiate a short EUR/SEK trade, targeting SEK10.70 with an entry of SEK11.26 and stop set at SEK11.60.”