Swedish crown to rally against euro, outpace Norwegian counterpart

Sweden's crown currency is expected to rally against the euro in the next 12 months, while more modest gains are in store for the Norwegian crown after a recent surge, a Reuters poll showed on Thursday. The Swedish economy is on course to outperform most of Europe in 2016, with a government agency forecasting 3.4 percent expansion.
Economists had expressed concerns over the potential impact on the export-dependent Nordic countries of Britain's decision to leave the European Union, but the Brexit vote has so far had little impact. Poll participants predicted the Swedish crown could rise by 5 percent against the euro in the next year, despite an ultra-loose monetary policy mix of negative rates and bond buybacks designed to rein in the currency and boost inflation.
In Norway, the crown would most likely weaken slightly against the euro in the short term before rising over the 12 months by a little over 1 percent from current levels. The Norwegian currency surged on September 22 when the central bank declared an end to a five-year monetary easing cycle, and got further impetus from Opec's decision to cut oil output, which will benefit petroleum producer Norway.
"We expect further oil price gains ahead and predict an average of $60 per barrel for the first quarter of next year," up from the current $52, brokerage DNB Markets wrote in a research note. "Together with a positive momentum in the Norwegian economy and an ever-shrinking probability of an interest rate cut by Norges Bank, this is a key reason why we expect to see further (Norwegian) crown strengthening," DNB added. Against the dollar, the Swedish crown is also expected to make gains in the next year. But its Norwegian counterpart will likely weaken in the coming three months and only recover some of the expected losses by autumn 2017.