Opinión de mercados

US Elections beyond

The results of today’s U.S Presidential election, and the implications in the economy of the evolution of the Covid-19 are the two main drivers for the Usd vs Euro in the coming weeks, and months.

The market is more inclined towards a weaker Usd in the near future, and up to a year. However, the importance of some the forces below will make an eventual transition to take longer range trading pattern.

Overnight volatility in the FX options markets, trading higher than in 2016 all day.

Usd negatives

Biden clear win
Biden more relaxed on trade, and on the Usd level
Higher corporate taxes by Biden
Fiscal stimulus package, seen as dovish
Fundamental, theoretical Price
Eurozone current account surplus
U.S deficits

Usd positives

CTFC positioning very short USD, although at lesser extent than a month ago
Trend of increasing yield advantage of US markets vs European
Trump win
Biden weak win, or contested election that takes weeks to clear up
Covid-19 lockdowns in Europe
Any known/unknown upcoming risk situation
5 year swap/inflation linked swap hit a four month low in the Eurozone.
ECB would deliver more stimulus in December’s meeting
Verbal intervention by ECB’s Lagard marked 1,20 level