Macro and Markets Forecast Edition: Weaker USD - Stronger Scandies

Nordea argues that the period of US outperformance is over, necessitating a global portfolio rebalancing that will weaken the USD against the EUR, SEK, and NOK.

Key Takeaways

• 1.US economic and asset outperformance is ending, leading to a structural reallocation out of USD-denominated assets.
• 2.The SEK is expected to strengthen driven by repatriation flows and Swedish institutions reducing their US Treasury exposure.
• 3.EURNOK reached forecast lows earlier than expected due to higher inflation prints and increased NOK buying by Norges Bank and oil companies.

Table of Contents

• More downside for EURUSD – US outperformance is behind us
• SEK – the market is in sync with our forecast
• EURNOK: stronger NOK came early
• Nordea FX-forecasts

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