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RBC's Trade of the Week Goes Long EUR/SEK

FOREX
  • RBC's trade of the week is long EUR/SEK, initiated at 11.222 to target 11.45, with a stop at 11.11.
  • They write that the strong rally in equities in January has dragged the OMX up more than 7% and strong month-to-date local equity market gains have historically been associated with SEK selling into month-end as overseas investors rebalance hedges.
  • Longer-term, RBC are negative SEK against the very bullish consensus, as its status as a low yielding risky asset makes it a prime candidate as funding currency in an environment where carry is starting to matter.
  • Additionally, their economists point to the risk of a materially higher than expected Eurozone CPI.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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