Closer than predicted US Presidential contest leaves markets uncertain

US election, Us presidential contest, US, Unites STATES of America,

Currency and equity markets remained volatile as the US Presidential race was closer than predicted, leaving the result in doubt for days.
Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services, said: “After opening lower, the rupee traded in a narrow range against the US dollar, but the volatility within the range remained high. Market participants are cautious as early results suggest that the US Presidential election proved far closer than polls had predicted potentially leaving the result unsure for days or weeks.
“Volatility for the dollar is predicted to stay high also as focus are going to be on the FOMC policy statement which will be released later in the week . For the next couple of sessions, we expect the rupee to trade with a negative bias and quote in the range of 74.40 and 75.20.”
David A. Meier, Economist, Julius Baer said: “In a tight race, the US Presidential elections are not yet decided. The candidates have won their ‘must-have’ states and (President Donald) Trump is looking strong in having won toss-up states Florida and Texas. The vote are going to be decided within the swing states Michigan, Pennsylvania and Wisconsin, where the counting of early voting by mail could still stretch beyond today, opening the door for potential controversies.”
“The US elections are arising to be a really close shave . In the presidential race, the candidates look to have won their ‘must-have’ states so far, (Joe) Biden the Democratic strongholds in the coastal areas and Trump the Republican heartland in the South and Mid-West. As had to be expected, all is boiling down to the swing states. Here Trump looks surprisingly strong, likely having defended Iowa, Ohio, Georgia, North Carolina and also the large states Texas and Florida, so basically all the states where polls had predicted a toss-up,” he added.
Biden has now to win the Democratic-leaning swing states, in particular win back the northern “blue wall” states Wisconsin, Michigan and Pennsylvania that President Trump conquered in 2016. Here the preliminary results prefer Trump, but are based on Republican-heavy election day voting and the number of counted votes is still in the range of 60-80 per cent of expected votes, he said.
“President Trump has already jumped onto the occasion in accusing the Democrats of trying to steal the elections. A counting that lasts for days raises the likelihood of disputes, lawsuits and ultimately civil unrest,” Meier added.
David Kohl, Chief Economist, Julius Baer said the tight US election outcome and therefore the associated uncertainty provide short-term support for the US dollar.
“Once the election outcome is understood , a divided government would support the US economy and weaken the USD moderately. A blue wave has the potential to weight stronger on the longer-term USD outlook while rising the odds for a swifter recovery,” he added.
Kohl said the still pending US election outcome keeps uncertainty high, supporting the USD short-term given its safe-haven characteristics. “Looking beyond the short-term uncertainty, a divided government either under President Trump or under President Biden will deliver moderate support for the economy and that we expect the USD to weaken, reflecting rising risk appetite.”
“A united government or a blue wave would boost the support for the economy and at an equivalent , the longer-term headwinds for the USD. The expansionary fiscal policy will support the economic recovery and risk appetite, with the latter weighing on the USD. The prospect of higher corporate taxes is an additional burden for the longer-term USD outlook,” he added.

MD Foorqan

Motivational speaker, Storyteller, Content creator.Founder of KUMFOO MOTIVATION. https://www.youtube.com/c/kumfoomotivationhttps://www.youtube.com/c/theturksmotivation

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