SEK to Jump on Friday's PM Vote: Gridlock Breakthrough in Sight?
SEK TALKING POINTS – Riksdag, SEK, USD/SEK, SWEDEN
- PM vote on Friday may end painful months of political gridlock
- Stefan Lofven – Social Democrats – may have secured key party
- SEK may jump on the news and push USD/SEK below 8.9598
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After months of political gridlock, Sweden may finally have a government after the Riksdag votes on Stefan Lofven of the Social Democrats party as Prime Minister. Lofven was able to piece together a coalition of center-right parties but was forced to adopt policies in line with their position on the political spectrum. This meant Lofven had to take his government from being center-left to being slightly center-right, and had to exclude his ally, the Left Party – a former communist party.
The Center, Liberal, and Left parties have all agreed to offer passive support in Friday’s vote, despite the latter group’s initial objection. Sweden’s parliament operates under the system of negative parliamentarism, meaning that a candidate does not need a majority to vote for him/her but rather a majority to not vote against him/her.
After intense talks, Lofven successively got Left Party leader Jonas Sjostedt to abstain from the vote by promising a degree of influence in policy formation. However, the former communist party has threatened to call a vote of no confidence if certain right-wing policies – specifically on labor laws and rent deregulation – were passed. Together, with the remaining parties of the broken Alliance coalition and Sweden Democrats, they could easily topple the government through such a measure.
For the time being, however, Sweden appears to be approaching a solution – albeit a precarious one – to ending its constitutional crisis. The Swedish Krona will likely jump if Lofven is confirmed and potentially push USD/SEK below the 9.0086-8.9598 support range, down to 8.9094. However, it is not likely to stay in the lower trading ranges throughout 2019. Click here to find out why!
USD/SEK – Daily Chart
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.