Sell SEK as Riksbank is likely to cut rates more than market expects: BCA By Investing.com

US Dollar Swedish Krona0.14%Euro Swedish Krona0.24%Norwegian Krone Swedish Krona0.32%

Investing.com -- The Open an account on the official website of Pepperstone Foreign ExchangeRiksbank is expected to implement deeper interest rate cuts than what is currently priced into the overnight index swap (OIS) curve, according to a new analysis from BCA Research.

BCA Research attributes this forecast to two main factors: elevated trade uncertainty in global markets and a genuine slowdown in the Swedish economy. These combined pressures will likely force Sweden’s central bank to take more aggressive monetary easing actions than markets currently anticipate.

For investors looking to capitalize on this outlook, BCA Research recommends maintaining long positions in the Norwegian krone against the Swedish krona (NOK/SEK), a strategy the research firm has been highlighting for several months.

While the tactical recommendation focuses on the NOK/SEK trade, BCA Research notes that the Swedish krona is undervalued from a longer-term perspective. This creates potential opportunities for strategic investors.

The research firm suggests that investors should use tactical market pullbacks as opportunities to build strategic positions in the Swedish currency, balancing short-term trading opportunities with longer-term value considerations.

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