SEK monthly currency outlook (6-12 month)

As 2016 comes into focus, so will the next major wage round scheduled next year. The wage agreements covering around 3 million employees (~63% of labour force) in the private and public sector in Sweden will expire end of this year. 

Unless the Riksbank manages to engineer a material rise in headline inflation (current consensus forecast is just 1.0% in early-2016), the risk is that wage negations are benchmarked to very low inflation expectations and employees lock in very weak wage growth for three years. This in turn will put downward pressure on future inflation, making the task of battling low inflation even harder for the Riksbank. 

Assuming core inflation continues its trend acceleration, EUR/SEK is drifting lower in the latter half of the next year once higher prices become more entrenched and the Riksbank can start to gradually raise interest rates, says RBC Capital Markets.