For this issue of Danske's FX Thermometer , clients were asked where they see EUR/SEK, EUR/NOK and EUR/USD on 11 March and if ( 1 ) Riksbank will hike next week, ( 2 ) how many times the Riksbank will hike in 2019 and ( 3 ) how many times the Norges Bank will hike in 2019.
EUR/SEK? The median forecaster was right in expecting EUR/SEK to move lower over the past three months (Chart 1). Now, clients continue to bet on or at least project a stronger SEK, with a median 3M (NYSE:MMM) forecast at 10.16 (Table 1). The projected 1.3% appreciation of the SEK is marginally more SEK bullish than the historical average (Chart 1). We detect a home bias in the sense that Swedish clients in general have a lower estimate than non-Swedish ones. Only a 13% minority see EUR/SEK below 10.00 in 3M, whereas 26% expect the cross to rise further. Danske Bank's 3M estimate is 10.10.
EUR/NOK? The median forecaster was wrong in expecting EUR/NOK to move lower over the past three months (Chart 2). However, clients deem the recent selloff in the NOK temporary, projecting EUR/NOK at 9.55 in 3M (Table 1). The projected 1.6% appreciation of the NOK is more bullish than normal. We detect a small home bias in the sense that Norwegian clients are more bullish than clients outside of Norway. None of the respondents see the cross above 10.00 or below 9.00. Danske's 3M estimate is 9.40.
EUR/USD? Our clients have a decent track record in EUR/USD, where they successfully captured the ups and downs in Q2, Q3 and Q4 (Chart 3). Notably, clients have never been as bullish on EUR/USD as they are this time when they project a 0.9% rise in the cross (Table 1 and Chart 3). A 55% majority sees EUR/USD within 1.13 and 1.16 in 3M. Again, we find a home bias, as Finnish clients are more bullish on the EUR than non-Finnish clients. Danske Bank sees EUR/USD at 1.13 in 3M.
Riksbank hike next week? Clients are clearly divided in their views for the Riksbank next week, even before today's inflation data (the survey was conducted yesterday, 11 December). A small majority, 55% of all clients, expects a hike next week. Among Swedish clients the number is 65%. As a comparison, RIBA future contracts indicate a 65% probability of a 25bp hike.
Riksbank hikes 2019? 84% expect one or two hikes next year, whereof 52% expect one hike and 32% says two hikes. 35% expect two hikes or more during 2019. If we include 2018, 53% expect two hikes and 49% expect two hikes or more until the end of 2019.
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