US Presidential Election:
How will different kinds of currency react to the US Election?
What might happen on the Election Day?
2020 is a year full of unprecedented events, US presidential election will be an event that might not be similar to previous years. Attribute to the coronavirus pandemic, higher portion of voters are expected to choose postal voting by which the counting process may take longer time, so whether a winner can be decided on election night is still unknown.
The market would be much volatile if the result is uncertain. If a formal result cannot be announced within few days, safe havens might surge and risk currencies might plummet due to fear and worries on uncertainties.
On the other hand, if the result can be clear at that night or within the next day or two, the market’s risk-off sentiment would not be intensive, which in turns favours the risk currencies.
Furthermore, as Trump has not pledged a peaceful transition by last week, there is a chance that he will not accept the final result. If it happens, the market is likely to be extremely risk-off, leading to a flight-to-safety effect.
How would different kinds of currency move? What are Likely to Happen?
Safe Haven USD, JPY, CHF
Drop if there is a clear result within few days
Rise if there is a clear result but not to be announced within a week
Rise Sharply if Trump refuses to accept the outcome
Risk Currency AUD, CAD, NZD
Rise if there is a clear result within few days
Drop if there is a clear result but not to be announced within a week
Drop Sharply if Trump refuse to accept the outcome
Neutral Currency EUR, GBP
Rise slightly if Biden wins
Drop slightly if Trump wins
Exotic CNH, SGD
Drop slightly if Biden wins
Rise slightly if Trump wins
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