A Trump victory will likely strengthen the dollar and weigh on other currencies, while a Harris victory could lead to a rapid decline in the dollar.
Risk aversion sentiment continued to mark the market trendand the main indices, both European and American, they started the week in negative. The pan-European Stoxx 600 fell 0.3%, while the S&P 500 fell 0.28%. Meanwhile, the CBOE Volatility Index (VIX), or “fear gauge,” held at a four-month high of 22, indicating persistent hedging against political risks.
Trump’s positions show signs of softening
However, Trump’s positions began to show signs of relaxation as the dollar lost ground and US government bond yields fell before rebounding slightly. Survey data indicate that Harris could have advantage in key swing statesalthough the race is still very close.
In October, investors betting on the trump victory They boosted demand for dollars, gold and cryptocurrencies, while selling off stocks and bonds. However, analysts believe that the elections could trigger a sharp liquidation of positions, which could reverse the trends of financial markets.
“Since markets have largely priced in a Trump victory, there has been a substantial divergence between poll results and betting market (Polymarket) projections for the election outcome.”
Bets are placed on a very close race
“Most polls continue to show a very close raceso if the election is not decided on November 5, or if Harris wins resoundingly, it could affect global trade and there could be positive movements in stocks and bonds, although the Harris’ victory would be reflected in a negative dollar in the short term,” said Kelvin Wong, Senior Market Analyst at Oanda Singapore.
Michael Brown, senior market analyst at Pepperstone, argues that regardless of who wins, markets are likely to reverse as soon as the results are confirmed, as long as no recounts or legal issues arise. “Markets crave certaintyso any clear outcome would lead investors who hedged election-related risks to unwind and re-enter the market.”
Euro faces pressure
The US Dollar Index (DXY) initially fell but then rebounded as polling data on Monday suggested Democratic candidate Kamala Harris maintained a slight lead in the states. undecided.
Other G10 currencies also shrugged off early gains against the dollar, with the euro stable at its Monday opening rate of 1.0876 at 5:07 am CET. It is likely that a Trump victory will strengthen the dollar and drag on other currencies, while a victory of Harris could cause rapid backsliding of the dollar.
Stop sales of public debt
Bonds faced heavy selling last month due to Trump’s shift, and yields moved inversely to bond prices. Los US Treasury yields 10-year bonds fell 5 basis points to 4.30% on Monday, after reaching a nearly four-month high last Friday. The performance of german bond The 10-year bond remained stable at 2.39% after reaching 2.43%, its highest since July.
A trump victory could lead to more selling as his policies could increase the budget deficit, add inflationary pressure and force the Federal Reserve to limit rate cuts. A Harris presidency may not have the opposite effect, since their policies could also increase the public debt and deficitalthough potentially to a lesser extent. A divided Congress would likely offer the most balanced outcome for bonds, curbing excessive government spending and easing inflationary pressures.
Gold and bitcoin retreat
Both gold and bitcoin fell from their recent highs in recent trading sessions, also reflecting a possible reversal of Trump’s trade positions. Gold is considered a active traditional shelterwhile Trump’s vision of turning America into “the crypto capital of the planet” helped fuel bitcoin’s rally in October.
Los gold prices have been falling after reaching all-time highs last Wednesday. At 05:47 CET, gold futures were steady at $2,743 an ounce. Prices could continue to decline once the election results are known. However, any post-election agitationsuch as recounts or civil unrest, could cause gold to rise.
He bitcointhe largest cryptocurrency in the world, too fell on monday from a recent high of $72,000 (€66,200) to just over $68,000 (€62,500).
Additional sources • Euronews in Spanish