AUD/SEK Outlook:
Slightly positive, but likely to move sideways, as the AUD trades above its recent average, though lacking a clear driver for substantial movement.
Key drivers:
• Rate gap: The Reserve Bank of Australia's recent rate hike raises expectations for further tightening, contrasting with Sweden's accommodative policy.
• Risk/commodities: With strong demand for Australian commodities amidst a weaker US dollar, this supports the AUD, providing a backdrop for stability.
• One macro factor: Australia's inflation data surpassing RBA targets suggests persistent upward pressure on interest rates, which may bolster the AUD's appeal.
Range:
The AUD/SEK is expected to hold within its recent 3-month range, with stability amidst limited catalysts for extreme movements.
What could change it:
• Upside risk: A surprise acceleration in Australian inflation could prompt further RBA rate increases, boosting the AUD.
• Downside risk: Signs of weaker demand for Australian exports could impact the AUD negatively, particularly amid global economic concerns.
