The USD/SEK currency pair settled below recent high of 9.4847, its strongest level since September 4th, after US PCE inflation data met expectations and reinforced bets that the Federal Reserve could ease policy further this year.

Annual core PCE inflation has remained steady at 2.9% in August, while annual PCE inflation has accelerated to 2.7% from 2.6% in July.

Markets are now pricing in about an 85% chance of a 25 basis point Fed rate cut in October and a 33% chance of another 25 bps cut in December.

The Fed lowered its federal funds rate target range by 25 basis points to 4.00%-4.25% at its September meeting.

Federal Reserve Chair Jerome Powell said this week the US central bank had to continue balancing the competing risks of high inflation and a weakening job market in its future policy decisions.

In the meantime, Sweden’s trade deficit has widened to SEK 8.9 billion in August from SEK 6.3 billion in the same month of 2024.

Total exports shrank 5.1% year-on-year to SEK 144.0 billion, or the lowest level in over three and a half years.

On the global trade front, US President Donald Trump announced a new round of tariffs on imported drugs, trucks and furniture, which will take effect on October 1st.

The exotic Forex pair lost 0.10% for the week.