US election uncertainty will cause fairly sharp moves in financial markets in the next 48 hours

( 1 min )

  • Go back to blog home
  • All posts
    All posts|Currency Updates
    All posts|Currency Updates|International Trade
    All posts|International Trade
    Charities & NGOs
    Currency Updates
    Currency Updates|In The News
    In The News
    International Trade
    Product Update
  • Latest

4 November 2020

Written by
Matthew Ryan

Senior Market Analyst at Ebury. Providing expert currency analysis so small and mid-sized businesses can effectively navigate international markets.

The big uncertainty among investors going into this year’s US election, that the outcome would be delayed and/or contested, has come to pass.

hile most votes have been counted in the majority of states, many of the key battlegrounds, notably those in the Rust Belt area, are still to be called, with millions of mail-in ballots yet to be tallied up. Trump is currently marginally ahead in most of these, although the mail-in vote in many is said to favour the Democrats.

So far, the FX market has actually reacted relatively calmly, which is somewhat of a surprise given that the market had positioned itself for a comfortable Biden victory. The dollar sold-off as polls began to close in anticipation of a Biden win and then rallied as the night progressed, albeit EUR/USD is now trading roughly where it was at London open on Tuesday.

Whether this limited volatility remains the case is unlikely. We think that the longer the process drags on, the more support we’ll see for the safe-havens (including the dollar) at the expense of just about every other currency. The result in both Pennsylvania and Michigan may not be available until Friday, so it could be a few days before the final result is known. Trump has already stated his view that voter fraud has taken place, so a Biden win would undoubtedly be contested by the President, which would drag the process even further into the future and weigh on risk sentiment.

Regardless, we expect some fairly sharp moves in financial markets in the next 48 hours or so, as more ballots are counted and investors get a clearer picture as to who has actually won.

US jobless claims top 20 million; why did the dollar rally?