Despite the desynchronisation of ECB and Riksbank rates decisions, EUR-SEK rates differentials poorly explain the path of the FX rate, Société Generale FX strategists note.

FX market is trading the krone as an equity proxy

“The short rates spread has been widening since April, but the pro-carry environment stimulated the correlation between EUR/SEK and risky assets, especially European equities.”

“This correlation has been somewhat unstable this summer, but the latest joint bounce of the SEK and Eurostoxx suggests that the FX market is again trading the krone as an equity proxy.”