The USD/SEK currency pair settled above Friday’s low of 9.3510, its weakest level since October 3rd, as the latest US CPI data added to expectations of more Federal Reserve interest rate cuts.
The report, which has been delayed by the US government shutdown, showed that annual headline consumer inflation had picked up to 3% in September, the highest rate since January, from 2.9% in August. Yet, the acceleration was slower than forecasts of 3.1%.
Annual core CPI inflation eased to 3% in September from 3.1% in August.
“Headline inflation was in line with consensus, but the year-to-year was a little bit higher. This tells us that the tariff inflation continues to weigh on the consumer’s pocketbook and that inflation remains sticky, although it’s not running wild and that’s a good thing,” Peter Cardillo, Chief Market Economist at Spartan Capital Securities, was quoted as saying by Reuters.
“In terms of the Fed, we’re looking at a 25 basis point cut next week and they will have enough time from now to December to evaluate the inflation data that is coming in and even if it’s delayed. But it’s quite clear that the Fed has indicated that for now they’ve abandoned the inflation fight to prop up the jobs market from deteriorating any further, which means further rate cuts ahead.”
Markets are now pricing in about a 94.5% chance of a 25 basis point Fed rate cut in October and a 92% chance of another 25 bps cut in December.
Developments surrounding US-China trade negotiations also remain in focus. US President Donald Trump is to meet Chinese President Xi Jinping next week as part of a trip to Asia. Trump has said he expects to secure a fair trade deal with China.
The exotic Forex pair lost 0.64% for the week.
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