Both the Riksbank and Norges Bank left policy unchanged last week. In the near term, EURNOK is expected to trade hand-in-hand with oil prices but think a correction lower is more likely than a break higher into year-end as the FFV model points towards EURNOK overvaluation. 

"We would be looking for a meaningful move lower to engage in long positions ahead of weak Q1 data and an eventual Norges Bank cut in Q1 2016, which we currently envision", says Barclays.

On the contrary, relative SEK outperformance is expected among the European currency complex on solid economic fundamentals. The recent wave of migrant influx into Sweden is expected to support growth and inflation, according to the Riksbank's recent projections, and although the Bank is expected to retain a "wait-and-see" stance in the coming months, it is hard for the Bank to justify much looser monetary policy.  

The data calendar in the next fortnight is unsurprisingly quiet. Market attention will likely centre around the December Swedish ETS report (Monday 21), expected to re-affirm the solid growth outlook. Upticks are expected in manufacturing and consumer confidence following recent months of somewhat weaker prints for the latter. The market expects the headline index to increase to 106.9 from 106.5 in November. The NIER Swedish Economic forecasts (Monday) is expected to present a bullish outlook heading into 2016.