It’s finally here – after two years and more than a billion dollars spent campaigning, the US Presidential Election wraps voting today. The United States Dollar, after losing ground during trading yesterday, is a touch softer this morning in choppy trading.
Overview
Treasury yields, by contrast, have ticked slightly higher after running up the score in early trading yesterday as a potential hedge against volatile Dollar movement over the coming few days. Yesterday’s weakness for USD, due in large part to an unwinding of the ‘Trump trade,’ is on a much smaller scale this morning as both polling and betting odds on the outcome of the Presidential race continue to show, nationally, what is functionally a dead heat.
Implied volatility for many major and emerging-market currencies, however, is at historic highs leading into tonight’s poll closures. Though it’s unlikely that the US will see a final race call at any point tonight, markets are bracing for congressional and Senate races as well, which could lay the groundwork for what either incoming administration has to work with when attempting to enact its party platform. The potential for a split Congress (one Democratic chamber, one Republican) is likely the outcome that would promote the least volatility, whereas a sweep in either direction could spell major volatility and big movements for USD. As races and states are called around the country tonight, traders are prepared for high volatility, thin liquidity, and wide spreads. Monex USA will have coverage tonight until roughly midnight Eastern time.
What to Watch This Week…
- Tonight’s Election Coverage – Extra Support Hours until midnight EST
- US Election, today
- Bank of England Rate Decision, Thursday
- Fed Meeting and Presser Thursday 2PM
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
MXN ⇓
Mexican Peso is close to flat on today’s trading, but has faced down a string of heavy losses over the last several sessions that are keeping the currency just off its worst price against USD since late 2022. Implied volatility for the USDMXN pair is at its highest since the beginning of the COVID pandemic in March of 2020, and just off its 2016 levels at the advent of Donald Trump’s administration. MXN faces additional risk outside of just the US election, too, as its Supreme Court debates new President Claudia Sheinbaum’s controversial judicial reforms that would make all judicial appointments electable. The proposal of this policy change sparked a massive slide for MXN earlier this year.
EUR ⇑
The Australian Dollar is the big winner of the G10 this morning, outperforming its peers and gaining more than half a percent against USD. The Reserve Bank of Australia earlier this week held interest rates steady – while not necessarily a surprising move from the central bank, this is a move counter to what the vast majority of its global peers are doing amidst a global easing cycle. Looking ahead to tonight, however, there is risk of volatility in the AUDUSD pair. Australia’s close economic ties with China make it fairly sensitive to the outcome of the US election and the advent of a potential second Trump administration that could enact heavy tariffs on the world’s second-largest economy.
