Scandinavian currencies should also do well if geopolitical risk is priced out, with Sweden’s krona likely better positioned than Norway’s krone due to opposite exposures to energy prices, ING’s FX analyst Francesco Pesole notes.
Opposite energy price exposure favors Swedish Krona
“The drop in NOK/SEK yesterday might be attributed to that. Sweden also reported an acceleration in July CPIF inflation to 3.0%, but that was widely expected, and core inflation actually decelerated faster than anticipated to 3.1%.”
“We still aren’t forecasting any extra cut by the Riksbank, but admit this has become a much closer call after the EU-US trade deal. Anyway, markets are fully pricing it in, so we aren’t concerned about our bullish medium-term call on SEK.”
