Sunday, 1 November 2020

US Election: How will the financial markets react?

By Deya Hroob

Let's discuss the Scenarios

First of all, Gold and USD dollar heavily depend on fiscal stimulus. Democrats will try to pass a generous stimulus package. Moreover, Biden has promised to raise taxes on corporations , businesses and rich people. He  has also pledged sweeping changes to regulatory which will be positive for Gold, but bad for the dollar. *( especially if they win with a Blue Wave )

* A Blue Wave :  Democrats win Presidency and senate *

Below is a chart for GOLD in 2016 after Trump's victory.

On the other hand, tariffs on many major countries all over the world like China, UK and EU will remain in place if Trump wins the election which may put the EUR and GBP under pressure. Unlike his opponent, Biden will try to calm trade relations with china and lift sanctions on foreign countries. lifting these tariffs may boost the EUR and GBP as well.

 Below is a chart for EUR/USD in 2016 after Trump's victory.

Chaos Election ( Contested Election )

If one party refuses to accept his opponent victory, there will be chaos everywhere.

Trump assured many times that the election will end in supreme court and he questions the accuracy of mail-in voting as well. 

Safe-heaven currencies like the Yen , the Swiss franc and Gold like this situation and they skyrocket likely. 

 Below is a chart for USD/JPY in 2016 after Trump's victory.

Trade Wise and Good Luck,

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