The Swedish krona is the second-best performer this week, rising even more than the euro as equities sold off yesterday. This sounds rather odd given SEK’s usually high beta (especially relative to the euro) to risk assets, ING's FX analyst Francesco Pesole notes.

Souring sentiment in European equities can weigh on the krona

"But some hopes for peace in Ukraine ahead of a new Trump-Putin meeting and the sell-off in crude are definitely helping the krona. Incidentally, Swedish investors are generally highly exposed to US equities and this year we have seen large repatriation flows into Sweden whenever US-specific events hit equities. That naturally implies large SEK buying."

"We remain cautious on the upside ability for SEK beyond this, as souring sentiment in European equities can weigh on the krona today. But the medium-term outlook remains bullish for SEK, and its ability to withstand equity shocks like this one reinforces our view."