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The Sweden election is set to take place this weekend. Every general election in Europe is revolved about this new dynamic – the rise of anti-EU parties.
Euroscepticism and anti-immigration policies are at the heart of the September 9th, General Election.
The impact of the outcome of the election on the markets will depend on the coalitions:
Opinion polls have shown that the Sweden Democrats are on the rise, and there is a considerable uncertainty ahead of Sunday’s election. The possibility of one party winning a majority is very slim, and the mainstream parties have vowed not to form a coalition with the Sweden Democrats.
The markets are not expecting massive volatility in the stock markets, but the election results will likely be stimulating for the welfare and education stocks.
In the Forex markets, we are expecting the results of the election to drive the price action in the SEK pairs. The Swedish Krona is currently the worst performing currency among the G10 currencies against the US Dollar since the beginning of the year.
The Krona is also facing the same main issues that are fuelling its slide against the US dollar as other developed currencies:
Adding another uncertainty to the mix is the upcoming election. The latest poll shows that the Sweden Democrats remained the largest party which is intensifying the uncertainty ahead of the votes on Sunday. The Swedish Krona has been under intense pressure in the months ahead of the election.
Last week, the pair rose to nearly 19-month and 9-year low against the US dollar and Euro respectively.
Source: GO Markets MT4
At the time of writing, we are also expecting the Riksbank interest rate decision to come through. If the central bank maintains its existing forecast to hike later this year, we will see the Swedish Krona trading on the upside ahead of the election. However, whatever the markets reaction will be after the rate statement, traders will be exposed to the outcome of the Sunday’s election.
The results could either extend or reverse Thursday’s moves.
This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.
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