Stock markets rally today as polls have opened across the US and Americans will vote for the next US President
Besides the devastation caused by the coronavirus pandemic, the US elections have been the second source of uncertainty for global currency markets as the prospect of radical policy change weighs on the dollar
The greenback strengthened during the last week, although it is lower today, peaking one month Monday, however, it is still down about 10% its summits in March
The challenger Democrat Joe Biden ahead of President Donald Trump in the polls, with 8Avance 6 percentage points depending fivethirtyeight
But the election result may be tighter, with tighter races in several battlefield states, where the outcome will ultimately be determined due to the constituency system
Four years ago then Democratic candidate Hillary Clinton was ahead of the president in the polls, but still lost the election
« Volatility is on the rise because the liquidity of the hurdles around the election is very thin Everyone’s the same, there’s no one selling this stuff thinking it’s all right, » Jordan said Rochester, forex analyst at Nomura exchange platform, in a note
While the results are similar, Monex European, one of the leading specialists of trade currencies, published an analysis on how the results of the polling day could affect the dollar
During the year the dollar weakened due to accommodative policy shift on the part of the Federal Reserve and poor management of the pandemic
Ranko Berick, head of market analysis at Monex, said it’s possible the dollar « is now trading at a » Trump risk premium « »
« A victory at Biden could improve the prospects for macroeconomic growth in the US through better handling of the pandemic, » he said. « In my opinion, that would be slightly positive for the dollar against the currencies of the G10 «
However, other analysts have argued that a victory for Biden could weaken the dollar because of its major proposals stimulus
The analysis of Monex qualifies victory Trump « result of the status quo », which means that the current weakness of the dollar would probably remain
« However, uncertainty persists over the commercial policy, which potentially hinders a likely recovery in risk appetite in 2021, » said Berick « If the Republican sweep, new risk and uncertainty would be introduced on markets «
That said, Trump has insulted against a strong dollar for much of his term as president in a pre-pandemic world He has often said that a strong dollar offers other countries a competitive advantage, making difficult for US manufacturers
The markets hate uncertainty, the risk of a serious constitutional crisis is « likely to hammer the dollar, » said Berich
He added: « For reference, the pound to dollar exchange rate approached 10 during the US Civil War The impact is likely to worsen the longer tail crisis »
Whatever the outcome of the election, the US dollar will continue to be affected by the spread and / or ongoing monitoring of the pandemic and the development of a vaccine
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Presidential Election in the United States, 2020, Joe Biden, Foreign Exchange, Stocks, Donald Trump
World News – United States – How the election results could affect the US dollar
