The USD/SEK currency pair extended the gains from a day ago on Tuesday, as the US Dollar firmed after new US tariff threats and ahead of the outcome of the Federal Reserve’s and Riksbank’s policy meetings.
US President Trump announced on Monday plans to impose tariffs on imported computer chips, pharmaceuticals and steel in an attempt to encourage domestic production.
That announcement came one day after the US and Colombia pulled back from the brink of a trade war when the US said Colombia had agreed to accept military aircraft with deported migrants on board.
Market focus also sets on the Federal Reserve’s policy meeting for guidance regarding the future interest rate path.
The Fed is widely expected to leave its federal funds rate target range intact at 4.25%-4.50% at its January 28th-29th meeting. It would be the first pause in the monetary easing cycle, which was initiated in September.
In December, Fed policy makers forecast that inflation would continue moving toward the 2% target, but acknowledged the process could take longer than previously anticipated.
Several policy makers had also expressed concerns that the disinflationary process might have temporarily stalled.
In addition, Fed officials had pointed out that the central bank was at or near the point where it would be appropriate to slow the pace of rate reductions.
Meanwhile, SEK traders will also look to the outcome of Riksbank’s January policy meeting on Wednesday.
Sweden’s central bank is expected to cut its key policy rate by 25 basis points to 2.25%.
Swedish preliminary GDP growth data for Q4 will also be released on Wednesday. Sweden’s economy continues to develop in line with the central bank’s projection and there are signs the recovery is becoming more entrenched.
The USD/SEK pair was last up 0.66% to trade at 11.0032.
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