SEK vigilant on upcoming election – Danske Bank

The Swedish Krona keeps looking to the Riksbank meeting and the upcoming elections as the exclusive drivers of the near term price action, noted Valtteri Ahti, Chief Strategist at Danske Bank.

Key Quotes

“The result of the Swedish election is still very uncertain looking at the different polls. Hence, it makes sense that there is a certain political risk premium in the SEK”.

“Yesterday, we arranged a meeting with former Social Democratic PM Göran Persson and former leader of the Moderates Anna Kinberg Batra. We note that they both shared our view that a Moderate-led government is the most likely, even in the case the red-green block gets bigger”.

“We deem such an outcome as relatively more SEK-friendly given that it would probably be easier, in stage 2, to get a budget through parliament. The first threshold for the SEK is the Riksbank rate decision tomorrow. We stress that depending on what they say and then what happens after the election, EUR/SEK could be far from where it is a week from now”.