The Swedish krona dropped by more than 1% vs USD on Thursday as US tech stocks came under fresh pressure. Stabilisation in US equities looks necessary for EUR/SEK to return to its December range, economists at ING report.

The big loser in the US tech slump

“While having a generally high beta to global equity dynamics, SEK has the highest positive sensitivity in G10 to swings in tech stocks, with the underperformance of this segment having been a major factor behind SEK’s underperformance at the start of this year.”

“Riksbank’s very slow transition from its ultra-dovish stance, rising inflation and the exposure to the European slowdown caused by Omicron are set to keep a lid on SEK in the near-term.”

“A significant stabilisation/recovery in US tech stocks will likely be needed to send EUR/SEK back into its December/early-January 10.20/10.40 range, unless the Riskbank sounds particularly hawkish at the 10 February meeting, which we doubt will be the case.”