Sweden's ETS index steadily increasing

This week's Sweden's data might confirm the country's strong fundementals with the Economic Tendency Survey, and the retail sales would be main focus of the markets.

Indeed, the ETS index has been steadily increasing recently with recent reports pointing towards improved business and consumer sentiment. 

"Expectations are for a further increase in the headline ETS index (consensus: 108.5, previous: 108.3) and a 0.6% m/m gain in headline retail sales", says Barclays in a research note. 

Despite the high conviction on the domestic outlook, imminent ECB easing will likely cause the Riksbank to react at its December meeting and a 10bp cut in the repo rate is likely. 

"Given market pricing of close to a 50% chance of a December cut, we see some upside risks to EURSEK but expect rallies to be short-lived, as the SEK remains a top medium-term pick, given strong economic fundamentals and currency undervaluation. We forecast modest EURSEK depreciation and expect the pair to depreciate to 8.80 by Q4 2016", estimates Barclays.