The volatility begins to rise in the currency markets while the actions remained stable in the early hours of Tuesday, a sign of what lies ahead in the coming days as the world awaits the results of the elections in the United States, that develop during this “Super Tuesday” and generate tension among operators.
Overnight, implied volatility options for the euro/dollar soared to the highest level since November 2016, as did those of the pair dollar/mexican pesoin recognition that the latter could be greatly affected by protectionist policies if the Republican donald trump defeats the democratic candidate Kamala Harris.
He dollar index —which measures the performance of the greenback in relation to a basket of six other currencies of international relevance— had fallen 0.2% to 103.7 units, after the results of the latest surveys, which pointed in favor of the vice president . He European benchmark STOXX was down 0.2%, while the broader index MSCI of shares of Asia-Pacific outside Japan rose 0.7%, while the stock markets They were holding their breath before Wednesday’s opening.
Currencies, which unlike stocks trade 24 hours a day, saw more action, although they still offered only scattered and contradictory indications about which candidates investors were betting on. In the case of dollar, which had fallen as traders made final adjustments to their positions, bought 152.46 yen and changed hands at $1.0879 per euro. A clear victory for Trump would lift the greenback, while a victory for Harris would push it slightly lower.
Bitcoin It added 2.7% to approximately $68,884, given what the markets understand as more favorable policies for cryptocurrencies in an eventual government of the Republican than that of the Democratic candidate.
Markets are nervous about how protectionist trade policies of Trump in particular could fuel the inflation and affect the exports in the world’s largest consumer market, and it is expected that bonuses and the dollar move after the election results.
“Ultimately, American elections come down to this: whether the American electorate wants to vote for continuity of economic policy, institutional stability and liberal democracy (Harris) or a radical trade policy, further withdrawal from globalization and the democracy of the strong man (Trump),” the analysts of JP Morgan in a note: “In short, a vote for stability or change.”
Volatility in the face of future policies
It is considered that China is on the front line of tariff risk and the currency in particular is trading in suspense, with implicit volatility against the dollar around historical highs.
He yuan was around 7.1083 per dollar, while Chinese stock markets rose to nearly one-month highs as investors await a meeting of top policymakers in Beijing this week to approve local government debt refinancing and spending. . Additionally, China’s blue chip CSI300 rose 2.5% and Hong Kong’s Hang Seng rose 1.4%.
He Australian dollar barely reacted after the central bank left rates on hold, as expected, with all eyes on the election and the Australian dollar last rose slightly to $0.6614. “Simply, if Harris wins, we like to sell dollar/yen and buy AUDUSD,” said Citi currency strategists. “If Trump wins, we like to buy dollars against euros, Swedish krona and Norwegian krone.”
The Treasury marketswhich have priced in a US interest rate cut for Thursday, held firm in early European trading with US 10-year yields at 4.32%.
Euro zone bond yields rose, with the German 10-year bond yield rising almost 2 basis points to 2.41%, slightly below last week’s three-month high of 2.447%.
He oil held strong overnight gains due to delays in producers’ plans to increase output, leaving benchmark Brent crude futures at $75.24 a barrel after a 3% rise on Monday.
When the US election results are known after midnight, attention will focus on the key states of Georgia, North Carolina, Pennsylvania, Michigan, Arizona, Wisconsin and Snowfall.
A winner may not be known for days and Trump has signaled that he will try to fight through any defeat, as he did in 2020.
Source: Ambito
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