Global macro overview for 26/04/2018

The Swedish Riksbank maintained the repo rate at the level of -0.5% as widely expected. In the projection of the interest rate path, the bank dismissed the moment of beginning normalization closer to the end of the year, although the first full hike was included in the forecasts only closer to February 2019. Like in February, the Council member Ohlsson wanted a rate increase of 25 bp. The message to the decision is quite dovish. Although the bak notes the depreciation of the SEK, which argues for higher inflation, "continuation of monetary support is necessary to keep inflation close to the target."

The last wave of SEK sales was associated with a negative revision of expectations with regard to monetary policy and doves, and the tone of the meeting may already be largely discounted. The realized depreciation of the crown may also be an important factor for the Riksbank, as the weaker currency raises inflation and improves the competitiveness of exports, so in the longer horizon, it will help in making a decision on the normalization of monetary policy. But too weak a currency is not profitable for the economy. nevertheless, the Riksbank did not even attempt to verbally support the currency.Let's now take a look at the EUR/SEK technical picture in the H4 time frame. Generally speaking, the Riksbank was more dovish than the market expected, which restores EUR/SEK rally towards the level of 10.47. So far the rally stopped at this level and there is even a possibility of a Double Top technical pattern to be formed as the market conditions are overbought and the RSI indicator is showing a clear bearish divergence between the price and momentum. The nearest technical support is seen at the level of 10.34.


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