Flash: Look for opportunities is SEK pairs - BMO Capital Markets

FXstreet.com (Barcelona) - Stephen Gallo, European Head of FX Strategy at BMO Capital Markets notes that his preferred strategy is to favour short AUD/SEK and short NZD/SEK.

He holds this outlook in the event of surprisingly good Swedish data, in order to take advantage of the persistent effects of QE tapering speculation and commodity price weakness on a relative value basis. Further, he favours long CAD/SEK in the event of surprisingly weak Swedish data, in order to take advantage of North American and European growth divergence and the rather limited ability of EUR/SEK to move in either direction. Additionally he feels that given the latter’s upward trend channel which began in early March (around 6.1500), he thinks surprisingly weak data out of Sweden following this week’s rather upbeat US durables report could be enough to keep CAD/SEK above trendline support around the 6.4000 area, and force a test of the low-mid 6.5000s or higher – the former area being the 61.8% retracement level from the May 2012-March 2013 move from the 7.1000 area. He finishes by writing , “On the notion of even weaker Swedish data from this stage, we can only assume at this point that, if anything, pressure is building for the Riksbank to start becoming less passive about the level of the SEK.”