{"id":5945,"date":"2019-02-18T08:13:04","date_gmt":"2019-02-18T08:13:04","guid":{"rendered":"https:\/\/www.wasteyourtime.co\/?p=5945"},"modified":"2019-09-06T16:37:11","modified_gmt":"2019-09-06T15:37:11","slug":"swedish-krona-inflation","status":"publish","type":"post","link":"https:\/\/traders-paradise.com\/magazine\/2019\/02\/swedish-krona-inflation\/","title":{"rendered":"Swedish Krona set on volatile January Inflation"},"content":{"rendered":"

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2 min read<\/span><\/i><\/p>\n

\"Swedish
\nFebruary 18, 2019 <\/span><\/i><\/span>
\nThe Swedish krona is the worst-performing significant currency this year. It faced volatility on Swedish inflation data Tuesday. It looks the markets may be underestimating the risk for a surprise.<\/span><\/p>\n

According to SEB AB January is the month of the year with the most volatile inflation data. But a check of one-week price fluctuations in the euro-krona exchange rate implies traders are relatively satisfied.<\/span><\/p>\n

One-week implied volatility in the cross is trading around 50 basis points below its one-year average. The relative premium to own exposure to short-term risks stands below par. That suggests investors<\/a> can hedge themselves through insignificantly under-priced option plays.<\/span><\/p>\n

The\u00a0Swedish krona has been damaged this year by doubt that the country\u2019s<\/a> central bank can stick to a plan to hike interest rates in the second half of the year. \u00a0Karl Steiner, a strategist at SEB said that Inflation is the second-biggest driver for the krona among Swedish data and events, after Riksbank<\/a> policy announcements.<\/span><\/p>\n

\u201cStars seem to be aligning for out-sized moves in the krona considering the event risks that lie ahead,\u2019\u2019 said Fredrik Lockne, an options specialist at SEB. \u201cImplicit volatility looks rather cheap, in particular over the two-week tenor which captures both inflation and growth data.\u2019\u2019<\/span><\/p>\n

January data has the obvious inclination for downside surprises in headline inflation, at 71 percent of the time over the past seven years, SEB said. Swedish consumer prices are forecast to have dropped 0.7 percent in January on a monthly basis, from a 0.4 percent rise in December, as many stores cut prices after Christmas holidays. Inflation is forecast at 2.2 percent in annual terms, versus 2.0 percent in December.<\/span><\/p>\n

\"Swedish<\/p>\n

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