Elections in Sweden are closing in. We have previously written about the chaotic political landscape developing in the kingdom of Sweden. Right wing party, Sverigedemokraterna, have according to polls been the biggest winners so far.

Meanwhile the SEK has been the worst currency performer among the G10 countries recently.

Having concluded the above, do note how the SEK made a perfect reversal just at those April lows (for SEK lows, EUR/SEK chart). It will be interesting to see if the trend followers get caught in sudden reversals as we don’t only have the elections coming up, but also the Riksbank decision.

3 month ATM volatility has continued higher, just as we suggested a few weeks ago. There is probably room for some more upticks in implied vols but this should ebb out as we close in on the Riksbank and the elections events.

For the longer term economy, beyond elections and the Riksbank, we note Sweden’s PMI continues lower. Given the fact Sweden is a small export oriented economy, with companies often noting shifts in global demand early in the cycle, we find it a bit alarming to see the PMI fall this much, especially given the fact the SEK has been so weak.

Danger ahead for the Eurozone PMI?

Source: charts by Bloomberg