The pre-election race in the United States is reaching the home stretch. And this is happening against the backdrop of serious problems in the country’s economy due to the coronavirus pandemic. The US elections have always been in the center of attention of the whole world, since the influence of this country on the global economy is difficult to overestimate. But this year the attitude to this event is even more serious. Whatever the outcome of the American presidential campaign, it is clear that the world economy will suffer its consequences.
According to the latest polls, Biden is the leader of the race so far. As I see it, Donald Trump has already lost his “fighting spirit” and is ready to admit defeat. Although, perhaps I am wrong, and the situation will change dramatically in the near future.
The coronavirus pandemic has put pressure on the US dollar. And large-scale measures of financial support from the authorities have further strengthened it. The American currency has been falling in value for several months. At the end of August, the dollar index dropped to a minimum for the last more than 2 years. How the dollar will behave after the US elections are over is difficult to predict. Although it can be assumed that in the event of Trump’s victory, the tendency for the dollar to weaken will continue. Donald Trump has declared from the very beginning of his presidency that he is a supporter of a weak dollar and low interest rates. Well, if the polls turn out to be correct, and Biden gets the presidency, then we can expect the current trend to reverse.
Many observers note that anxiety among European politicians and investors is growing as the US elections approach. European countries traditionally have fairly strong economic ties with the United States. Almost 14% of all eurozone exports are to the United States. Therefore, Europe does not care who will be the next American president. Brussels’ relationship with Trump did not work out. Problems have been added. And if he wins, positive changes in the relationship are unlikely to occur, but there will be no deterioration. Well, if Biden wins, then, most likely, the dollar will be able to strengthen its position against the European currency. In general, experts do not expect significant fluctuations in the European stock market. If this happens, it will be after the US elections are over.
According to the survey results, the majority of small companies are neutral about the American presidential elections. They are preoccupied with coping with the coronavirus crisis. American small business is waiting for a solution to the issue of additional support from the state. So far, there is no certainty on the new stimulus package. The US elections , of course, will affect the business situation. If Trump cut taxes, then Biden promises to raise them.
As history shows, the markets begin to actively respond to the election campaign about a week before the elections. And if it is clear that a change in the ruling party will take place in the United States, then volatility can be very high. And we, a trader, need to take this into account.