Scandinavian currencies could perform well if geopolitical risks decrease, with Sweden’s krona potentially outperforming Norway’s krone. This is attributed to the two nations’ differing energy price exposures. Recently, the NOK/SEK rate fell, which may be linked to this. Sweden saw an anticipated rise in July’s CPIF inflation to 3.0%, though core inflation fell faster than expected to 3.1%.
The Riksbank is not expected to make additional rate cuts despite closer calls after an EU-US trade deal. The market has already factored this in, aligning with a positive medium-term outlook for the Swedish krona. Attention remains on EUR/USD, which holds near 1.1650 amid tariff concerns and US inflation data release. GBP/USD trades cautiously near 1.3450, with traders looking to secure profits amidst a rebounding US Dollar.
Gold struggles to maintain momentum beyond $3,400 due to a modest rise in the US Dollar. Expect changes in Canada’s unemployment rate with the upcoming Labour Force Survey report. The Bank of England cut rates by 25 basis points to 4%, with hints of an approaching end to the easing cycle due to inflation concerns.
From our perspective, the Swedish krona looks like a better bet than the Norwegian krone in the weeks ahead. Geopolitical risks have eased slightly, causing Brent crude oil prices to fall from over $95 last month to around $88, which hurts the oil-exporting Norwegian economy. Looking back at similar energy price drops in the late 2010s, the krona typically outperformed, and we expect that pattern to hold.
We believe the Riksbank is done cutting interest rates for now, even after the recent EU-US trade agreement. Sweden’s July 2025 inflation report showed CPIF at 3.0%, and more importantly, the latest manufacturing PMI data came in at a solid 52.4, suggesting the economy doesn’t need more stimulus. This reinforces our view that the krona has a stable foundation for the rest of the quarter.
Caution is advised for anyone trading the euro against the dollar, as it struggles to stay above 1.1600. This week’s US inflation data for July 2025 came in hotter than expected at 3.4%, giving the dollar a boost. With ongoing concerns about potential US tariffs on European auto exports, traders could consider options strategies that profit if EUR/USD falls towards the 1.1500 mark.
For the British pound, we think now is the time to secure profits on any long positions against the US dollar. After the Bank of England cut its rate to 4.0% earlier this month, recent data showing UK wage growth stubbornly high at 5.5% makes further cuts unlikely. This reality check is likely to cap the pound’s recent rally near the 1.3450 level.
Gold is unlikely to break through the $3,400 per ounce ceiling in the near term. The stronger US dollar and rising US 10-year Treasury yields, which have now hit 4.35%, make holding a non-yielding asset like gold less attractive. We would avoid building new long positions until this resistance is clearly broken.
Traders should watch the Canadian dollar closely today, as the July 2025 Labour Force Survey is due. Market consensus is for the unemployment rate to tick up to 6.3% from 6.2% previously. Any number that comes in below this forecast could spark a significant rally for the Canadian currency.
