Sweden's krona dropped more than all other G10 currencies on Wednesday, showing an above-average sensitivity to risk appetite. The EUR/SEK could extend its march forward on a break above 10.30, in the opinion of economists at ING.
Positive SEK seasonality in December to emerge if Omicron fears fade
“SEK faces wider downside risk than EUR when it comes to scaling down tightening expectations for 2022. Despite the hawkish surprise at the November meeting, the Riksbank is only projecting a first-rate hike in 2024. Markets are currently forecasting 30bp of tightening in 2022, and 50bp more in 2023; a realignment of rate expectations with the Riksbank’s rate projections is, by all means, understandable in the current market environment.”
“The EUR/SEK rally may find more fuel should it break above 10.30 by the end of the week.”
“Normally, SEK has a positive seasonality in December, but that might only emerge if the Omicron-variant risk is priced out.”
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