What will happen to the dollar and stocks after the US presidential election

And United States is nearing the culmination of presidential and congressional electionswhich will take place in Tuesday 3rd of November. For the time being, the Democratic candidate has the upper hand in the pre-election polls parties Joe Biden. After the first television debate in late September and after the events related to the disease Donald Trump covidem-19, Biden’s lead increased even more. Financial i commodity markets they are starting to count more and more the win of former Vice President Biden, writes Josef Kvarda, an analyst at SFG Holding.

Of course, many traders in the markets are cautious, as they remember the situation well before the four flightswhen opinion polls against Donald Trumpov they also favored Democratic candidate Hillary Clinton. Elections but in the end he won Trump. This is also due to the fact that many Republican voters do not want to fully express their preferences in the polls.

So we’re seeing market caution, but Biden’s leadership in surveys has hovered around ten percentage points in recent days, and markets are starting to account for the change in the White House. In the financial markets, this outlook is again reflected in rising prices shares and also weakening dollar. Commodities, e.g. clothing, they maintain strength as well gold.

What are the reasons and what the situation might look like after elections? The increase in Biden’s preferences reduces uncertainty, which is very important. Any result a vote that does not mean a clear and confirmed president for the next four years, on the contrary, leads to an outflow of risky assets such as shares, commodities.

Electoral a pat could occur in the case of – and Trump he indicated this in a television debate – that the current president would not have to acknowledge it election results. He sees Biden’s growing support in election polls. Uncertainty of non-recognition elections is declining, which is definitely favorable for stock markets, for which winning is not so important Short or his challenger Biden, but to know very soon after November 3 that a truly confirmed presidential winner elections.

Markets will certainly find the positive in certainty. In addition to certain disadvantages, each stock market candidate brings a number of economic advantages. The decline in uncertainty and the growth of Biden’s preferences mean a plus for stock markets.
In terms of currency markets and the impact on currencies, we are seeing a shift in the markets in the form of weakening dollar. It is a rumor dollar as a safe asset. And it’s the same situation as with shares. When uncertainty decreases results US Presidential elections, then that means dollar loses its attractiveness. And then there’s it too US Federal Reserve (Fed). Zero interest rates on US assets is pushing dollar long-term lower. If the uncertainty with US elections declining, traders and investors tend to invest more in riskier and more profitable assets than is currently dollar.

If elections On November 3, they will actually turn out as the polls indicate, so that Joe Biden wins, it will be good for them shares a dollar should continue to weaken. If result elections it will be tight and bring uncertainties, there would be a risk of non-recognition elections and political struggles. That would be the opposite for shares negative a dollar would strengthen.

If he won Donald Trump, I suppose election results have been recognized. In that case, it would be positive for again shares. On the contrary for dollar would be a positive message of victory Short (who would thus become the next, already the fourth president in a row, to be in the White House for two electoral period). Trump in fact, unlike Biden, it represents a continuation of the trade wars which before koronavirovou pandemics have been a major global risk economy. Another risk on the horizon would encourage dollar.

Josef Kvarda (1974) was born in Hustopeče, South Moravia, studied economics at the Faculty of Economics, VŠB Ostrava. As an economist and analyst, he went through Atlantik FT or Cyrrus, and since 2018 he has been the chief analyst of Finin, a company in 2019 became part of SFG Holding. His domains are financial and commodity markets and macroeconomic developments, focuses on the world economy with an emphasis on the US, euro area, China and the Czechia.

SFG Holding originated in in 2019 by merging two separate companies Success Group and Finin Group, backed by their founders Tereza Kouklová and Michal Dědek. The holding is engaged in professional consulting and financing of individuals and companies, real estate services, project management and development investments, real estate and startups.

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