Markets bet on Biden’s victory

Trading 04 Nov 2020 Donner votre avis

analytics5fa2cd06bf008.jpg

Bookies are again betting on Joe Biden's victory. As a result, the US dollar began to move downwards. Betfair, the online betting exchange, estimates Joe Biden's odds of winning at 69%, while earlier the forecast was below 20%. The rise in risk sentiment is also attributed to a growing gap between Biden and Trump in Wisconsin.

The emerging market currencies, including the Mexican peso, have posted notable gains against the US dollar. While in the Asian session the EM currency index dropped by more than 1%, during the New York session, it returned to positive territory. Such dynamics may indicate that markets have already prepared for a defeat of the current president.

However, such market reaction shouldn't be taken seriously. In the morning, the forex market and the US dollar were acting as if the victory of Donald Trump has already been confirmed. The market sentiment is constantly changing, and volatility is increasing. This is quite normal, as market participants are awaiting the announcement of the election results.

Notably, Trump has already claimed himself a winner and made it clear that he would go to the Supreme Court if the election results were not in his favor. This means that most likely Donald Trump will contest the results of the election. This will cause increased volatility in the markets and will lead to higher demand for safe haven assets. In addition, the decision on a new stimulus package will be delayed once again which will contribute to the US dollar rally.

After a round of sell-offs at the upper boundary of the trading range had finished, the situation became more favorable for the US dollar index. The outcome of the US election will definitely give momentum to USDX. However, the technical support above the 94 area indicates a good buying opportunity for the dollar bulls.

analytics5fa2cd1f80a42.jpg

The trajectory of the EM currencies will mostly depend on the US dollar, or in other words, on the US election results.

"The worst-case scenario for the EM currencies is a steady rise of the US dollar. In this case, the central banks of developing countries will need to cope with the economic impact of the pandemic and at the same time stabilize their own capital markets. All this will provoke increased volatility in the emerging market currencies," analysts warn.

Some EM currencies, the Russian ruble in particular, may turn out to be more resilient in these circumstances. So, they are likely to maintain positive dynamics.

The yuan traders bet on the victory of Democrats. Yet, Biden's victory is unlikely to significantly improve the relationship between the two trading partners. It is true that Joe Biden is more level-headed and holds a less aggressive stance on China. It really doesn't matter who wins the election. Most probably, Washington will continue to take a tough stance against Beijing.

The material has been provided by InstaForex Company - www.instaforex.com

Répondre

Vous devez tre connecté pour écrire un commentaire.