USD/SEK Outlook:
The USD/SEK is likely to decrease as it is currently trading 1.2% below its 90-day average and near recent lows. ING Bank view: USD/SEK should continue to have larger downside potential in line with their bearish USD outlook, targeting a drop below 8.50 this year.
Key drivers:
• Rate gap: The Federal Reserve's potential for cutting rates contrasts with the slower easing from Sweden's central bank, creating downward pressure on the USD.
• Risk/commodities: The strong risk appetite, driven by geopolitical tensions, supports the safe-haven dollar against less stable currencies, including the SEK.
• One macro factor: Recent indications of falling US producer prices could weaken inflation expectations, affecting the dollar's strength.
Range:
Expect the USD/SEK to drift within its recent range as it tests lower levels.
What could change it:
• Upside risk: A significant geopolitical event could further boost demand for safe-haven currencies.
• Downside risk: Strong economic data from the US, particularly regarding job growth, could bolster the dollar above recent averages.
