Insights 
VT 
Sweden’s CPIF inflation for October was 3.1%, exceeding expectations, with core inflation slightly above consensus at 2.8%. This data aligns with the Riksbank’s message that another rate cut is unlikely.
The market’s reaction in the EUR/SEK has been minimal, as little to no chance of further cuts was anticipated. The data supports a bearish outlook for EUR/SEK, with a target of 10.90 in the short term.
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Inflation And Currency Market Dynamics
Sweden’s latest inflation number for October came in hotter than we thought at 3.1%, which is still well above the Riksbank’s 2% target. This confirms the central bank’s message that they are in no rush to lower their 3.75% policy rate. The market had already priced this in, so the immediate currency reaction was limited.
The key factor for the Krona is the widening gap between the Riksbank’s stance and that of the European Central Bank. The ECB has already cut its main rate twice since the highs of 2023, bringing it down to 3.25% to support a weaker Eurozone economy. This rate difference makes holding the Krona more attractive than the Euro, which supports our view.
For derivative traders, this reinforces a bearish outlook on the EUR/SEK pair. We believe the path of least resistance is downwards, especially after the pair failed to break above 11.30 last month. We are now targeting a move towards 10.90 in the weeks ahead, a level we haven’t seen since early 2024.
A good way to position for this is by buying EUR/SEK put options. This gives you the right to sell the pair at a set price, offering a clear way to profit from a fall while capping your maximum loss to the premium paid. Consider December-expiry puts with a strike price around 11.00 to capitalize on this expected move.
