The USD/SEK currency pair traded within a narrow range on Tuesday, not far from recent three-week high of 10.3974, following Swedish CPI inflation data.

Meanwhile, investors continued assessing the outlook for US interest rates in the wake of a strong employment report that drastically affected monetary easing expectations.

Markets are now pricing in about an 86% chance of a 25 basis point rate cut at the Federal Reserve’s policy meeting in November, compared to a 47% chance a week earlier.

Only 50 basis points of rate cuts are priced in by year-end, compared to over 70 bps a week ago.

Investor focus now sets on the key US CPI inflation report on Thursday that may provide further clues over the Fed’s interest rate cut trajectory.

Another highlight this week will be the minutes of the Fed’s policy meeting in September, to be released on Wednesday, while at least 7 Fed representatives are scheduled to make speeches that same day.

“We don’t see conditions in place for a recession, and believe the economy is in relatively good shape despite the current slowdown,” Steve Boothe, a portfolio manager in the fixed income division of T. Rowe Price, was quoted as saying by Reuters.

“We expect the Fed to deliver 2 more 25 bps rate cuts this year, for a total of 6 cuts by next year.”

In Sweden, the annual consumer inflation has eased to 1.6% in September, or the lowest rate since July 2021, from 1.9% in August, preliminary data showed.

As of 7:29 GMT on Tuesday the USD/SEK currency pair was inching up 0.08% to trade at 10.3508.

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