Our Global Head of Forex Strategy, Peter Kinsella, shares his thoughts on the forthcoming US presidential election.

The forthcoming US presidential election is a key moment for FX markets, because it will lead to important economic and political policy changes. Consensus expectations are for a Joe Biden victory, but as yet, a so-called ‘blue wave’, where the Democrats take control of both houses of Congress, has not been priced in. We anticipate that currencies with a high beta to global growth, like the Australian dollar and the Swedish krona, will fare well in a ‘blue wave’ scenario. If President Donald Trump wins, USD/JPY may fall to levels of around 103.

Here at UBP, we anticipate that the USD will weaken on a sustained basis over the coming year, reflecting the rapid deterioration in the US current account deficit. Longer-term USD weakness is inevitable in our view, and if Trump retains the presidency, long gold positions should also perform well, due to the possibility of a continued deterioration in US–China relations.

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Peter Kinsella
Global Head of Forex Strategy