SEK and CHF: Two very different outlooks

Despite Riksbank Governor Ingves talking over the holiday period about downside risks to inflation from rapid currency appreciation, Sweden's economy easily justifies a stronger SEK. Indeed, this should be confirmed in this week's December manufacturing PMI data (Monday) and November IP (Friday; consensus: 4.5% y/y).

Swiss December manufacturing (Monday) is expected to edge higher, to 50.1 from 49.7, but the economy continues to suffer from an extremely overvalued CHF, which is weighing on export growth and import prices. Indeed, the currency is continuing to exert downside pressure on inflation, with December CPI inflation (Friday) expected to print at -1.2% y/y.