Swedish business website www.privataaffarer.se is writing today that increasing interest rates in the US in combination with continuously low interest rate levels in Europe are paving the way for a stronger US Dollar compared to the Euro.
Several analysts are said to predict that the USD and the Euro could reach parity before the end of this year. Merrill Lynch is said to be one of those while BNP Paribas believes that it will take until Q1 2016 before this will happen, depending on whether the Federal Reserve will hike rates once or twice before year’s end.
Even Sweden’s SEB believes in parity by the end of 2015 and they expect a further strengthening of the USD versus the Euro during Q1 2016. SEB also expects the Swedish crown (SEK) to be significantly weaker versus the US Dollar. Especially if the central bank will lower rates further during the fall. In its most recent edition of its FX newsletter, SEB says that one USD could cost as much as SEK 9,47 during Q1 2016, compared with today’s level of around SEK 8,7.
We note that one of the big beneficiaries of a stronger USD versus the SEK is Swedish vehicle inspection operator Opus. The company has a large share of its revenues coming from North America. Elsewhere, German capital goods company Stabilus, which we have written about recently, is also benefitting greatly from the USD strengthening versus the Euro, as more than 50% of sales come from outside Europe.
Disclaimer: Nordic Investor holds shares in both Opus and Stabilus.