Scandinavian currencies could do well if geopolitical risks lessen. Sweden’s krona may perform better than Norway’s krone, mainly due to the different impacts of energy prices on the two countries. Recently, the NOK/SEK exchange rate dropped, likely linked to this difference. In July, Sweden’s CPIF inflation was expected to rise to 3.0%, but core inflation fell more quickly than anticipated to 3.1%. The Riksbank is not likely to cut rates further, even after the recent EU-US trade deal. The market has already considered this, which supports a positive outlook for the Swedish krona in the medium term. The EUR/USD is stable around 1.1650 due to tariff worries and the release of US inflation data. The GBP/USD trades cautiously near 1.3450 as traders aim to lock in profits with a recovering US dollar. Gold is struggling to stay above $3,400 because of a small uptick in the US dollar. Canada’s unemployment rate could change with the upcoming Labour Force Survey report. The Bank of England lowered its rates by 25 basis points to 4% and hinted that rate cuts may end soon due to inflation worries. We believe the Swedish krona is a better investment than the Norwegian krone in the coming weeks. Geopolitical risks have eased a bit, leading Brent crude oil prices to drop from over $95 last month to around $88. This decline hurts Norway’s oil-based economy. Historically, when energy prices have dropped like this in the late 2010s, the krona has typically performed better, and we expect this trend to continue. We think the Riksbank will pause interest rate cuts for now, even with the recent EU-US trade agreement. Sweden’s July inflation report showed CPIF at 3.0%, and a solid manufacturing PMI of 52.4 suggests the economy doesn’t need more stimulus. This supports our view that the krona has a stable foundation for the upcoming quarter. Traders should be cautious when trading the euro against the dollar, as it struggles to stay above 1.1600. This week, July’s US inflation data came in higher than expected at 3.4%, boosting the dollar. With ongoing concerns about potential US tariffs on European auto exports, traders might consider options strategies that would profit if EUR/USD drops to around 1.1500. For the British pound, this is a good time to take profits on long positions against the US dollar. After the Bank of England cut its rate to 4.0% earlier this month, recent data showed that UK wage growth remains stubbornly high at 5.5%. This reality likely caps the pound’s recent rise near the 1.3450 level. Gold is unlikely to break the $3,400 per ounce barrier soon. The stronger US dollar and rising US 10-year Treasury yields, now at 4.35%, make holding gold less appealing. We recommend avoiding new long positions until this resistance is clearly surpassed. Traders should pay close attention to the Canadian dollar today as the July Labour Force Survey is set to be released. The market expects the unemployment rate to rise slightly to 6.3% from 6.2%. Any result below this forecast could lead to a significant rally for the Canadian currency.

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