Trading the U.S. Election Results
So, very soon this endless torture is going to be over and we can all get on with talking about something else. Unless, that is, a nightmare scenario like 2000 arises where the result hinges on a handful of disputed votes. This is unlikely, and though I blow my own trumpet (no pun intended) for tipping her all along, it is looking increasingly likely (according to pollsters) that Hillary Clinton will win, with forecasters now giving her a greater than 70% chance of victory quite uniformly.
A Trump victory is not out of the question at these odds.
I have already been tipping USD / JPY to rise and as Clinton’s odds improve it has already gone up.
What if you want to trade as the actual election results are coming through?
You should be careful, as sometimes by the moment an outcome becomes obvious, its movement is already over. The expected Clinton-driven USD rally might not last very long, so how to time it?
The first truly interesting results are going to start coming out from about Midnight London time, when the polls in eastern Florida close. You can expect an early lead for Clinton, but if representative results from that state indicate a clear victory for Clinton, it is game over for Trump, and the election will be called early for Clinton. We will also start to get results from North Carolina and New Hampshire which are crucial states.
Once this happens, we can expect the USD, AUD, and NZD to rally, and the JPY, Gold and probably also the Swiss Franc to fall. Global equities should also get a boost.
If the early returns from Florida look competitive for Trump, or if they are showing a stronger Trump vote than has been forecast by the polls, we can expect a more violent market reaction, but in the other direction.
The election will then come down to a range of several other swing states. Trump’s problem, and the major reason why the markets are expecting a Clinton victory, is that Trump must win almost all of them.
What it seems to be boiling down to is this: Trump must win Florida, North Carolina, and Ohio, plus either Michigan or Pennsylvania. This is assuming he will lose Nevada, which is looking like the probable outcome. To put it even more simply, without Florida or Pennsylvania, Trump will be finished. Without Nevada, he will realistically need either Michigan or Pennsylvania as well as Florida to win.