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### POV: SEK'S RECENT RECOVERY IS A........>

EURO-SEK
EURO-SEK: ### POV: SEK'S RECENT RECOVERY IS A HEADFAKE, NO MEANINGFUL CORRECTION
ANYTIME SOON
-EUR/SEK's pullback from the SEK10.25 area (the weakest SEK's traded since 2010)
has lifted hopes of a meaningful recovery. But, these hopes are unfounded as
markets buy SEK ahead of dividend season which, historically, is followed by a
weaker SEK.
-As many as 150 Swedish firms pay dividends from end-March to May during which
EUR/SEK tends to rise. Of the past five years, EUR/SEK has risen in every April
and May month except two, meaning SEK has weakened across 80% of all
dividend-paying months.
-The most profitable strategies for EUR/SEK over the past year still suggest
EUR/SEK is a buy (4 of the top 5 strategies have buy EUR/SEK positions, number
one being the weighted MA strategy).
-RISK: A sharp correction in CPI could prompt a faster end to easy Riksbank
policy. Inflation is currently alongside expectations, but an improvement beyond
2.0% Y/Y CPI could be the catalyst for a protracted SEK recovery.

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