The USD/SEK currency pair settled above recent low of 9.3735, its weakest level since October 29th, as traders now saw a Federal Reserve rate cut in December as much less likely than before.
An increasing number of Fed officials have signaled reticence on further rate cuts due to inflation concerns and indications of relative stability in the US labor market.
The Federal Reserve lowered its federal funds rate target range by 25 basis points to 3.75%-4.00% at its October meeting. But, Fed Chair Jerome Powell had said that a December rate cut was not a foregone conclusion.
Markets are now pricing in about a 44% chance of a 25 basis point Fed rate cut in December, compared to a 67% chance a week earlier.
This has triggered a sell-off in US stocks and government bonds and a rush into safe-haven currencies.
Market players are also attempting to predict what US macro data will show when it is published after the US shutdown ends.
Meanwhile, Sweden’s annual consumer inflation has remained stable at 0.9% in October, confirming the preliminary estimate.
Still, the latest reading has remained well below the Riksbank’s 2% target.
And, Sweden’s consumer price index with a fixed interest rate (CPIF), Riksbank’s target variable for inflation, went up 3.1% year-on-year in October, matching the pace in the prior month.
The exotic Forex pair lost 0.89% for the week.
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