EBC Markets Briefing | Swedish krona eases in wake of Fed rate hike

The Swedish krona weakened on Thursday after the ​Fed raised interest rates and flagged more hikes in coming months. Saudi Arabia reportedly offers ship-to-ship crude transfers.

Chair Warsh said inflation is still too high. Goldman Sachs has updated its forecast, predicting that the Fed will increase interest rates by 25 bps at its October policy meeting.

Trump issued his sharpest indirect criticism to date against the move. This escalation reflects growing tension over monetary policy decisions intended to cool the economy.

The Swedish krona and Swiss franc are becoming top choices for funding carry trades, as the yen's recent surge has made it a less dependable option than before.

The Swedish krona is the worst performing G10 currency this year. It has continued to weaken this week, with the final result of a tight presidential election still pending.

The country's consumer price inflation rose 0.3% in August, while much of the Western world has battled sticky core prices. The Riksbank is expected to keep its policy rate anchored at 1.75%.

EBC Financial Group analyst says the Swedish krona entered oversold territory, but a decisive bearish breakout pointed to further gains ahead. A potential rally towards 9.75 per dollar may offer the entry point to short.

Asset Recap

As of market close on 16 September, among EBC major products, Edwards Lifesciences shares led gains after outlining a business that is moving beyond its long reliance on transcatheter aortic valve replacement.

Crude oil prices dropped sharply as the Trump administration tried to reassure the market that Saudi Arabia's damaged East-West pipeline will restart operations in days.

Japan faces a critical monetary policy dilemma, forced to weigh maintaining ultra-low interest rates to manage its massive national debt against aggressively hiking rates to stabilise the depreciating yen.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.