Election update

Election update

Indeed, the next couple of years may be far more challenging for the Trump policy machine if the Democrats vote shows up.

I think the fear of the Blue wave is receding quickly but none the less we need to keep things in perspective in the sense this is only 2018 and not 2020. Markets and traders especially love to price in worse case scenarios and bring out history books to prove points. i.e. that a Democratic house is bad for equity markets. OK maybe so but realistically I can’t see how the Democrats would want to be perceived as Killjoys and try to stifle any policy which is supporting the economy, why not just let the natural course of tax cut fade out then they can have a good argument.

While the first wave of dollar reaction could be little more than a knee-jerk response, some critical levels will need to be monitored 1.1500 EURUSD, and 113 USDJPY as these could trigger a more profound correction.

But The market is singularly focused on two districts votes now: Virginia 7 and Kentucky 6. And the USD is reacting to whichever way the decision goes. Right now, that’s Republican lean, so strap in this is getting bumpy.

China

Flying under the radar *CHINA PLANNING NEW TAX-CUT MEASURES: ECO. INFO DAILY but details about timing and the scope of the cuts remain sketchy. Regardless the Yuan bears are out in force as its unlikely China will fall into Trump’s good books regardless of the outcome of the election.

Gold

Gold markets continue to track the dollar in ping pong styled fashion, which makes running any sizable risk a dangerous proposition at best until the election dust settles. But there’s enough risk on the table to keep buyers entertained.

OIL

Oil prices remain weighted down by a more robust than expected API inventory build, and anticipated supplies from the middle east. When factoring in more waivers, calls for more OPEC supply and the latest boisterous US supply forecasts, the path of least resistance does appear paved lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes