04/11 – Too close to call

Jeremy Thomson-Cook
Jeremy Thomson-Cook 04 November 2020

USD: Expect no results for a few days

EUR: Services PMIs due

GBP: Strong ahead of BOE meeting tomorrow

US Dollar

After a long night, comes a longer day. We may have an idea about how this election is going to go but clarity and certainty unfortunately is in short supply.

The prospects of a blue wave – a Democratic sweep of the White House, Senate and House – are vanishingly thin and some pivotal states – Pennsylvania, Michigan and Wisconsin – may take as long as a day or two to certify their respective tallies. The dream scenario for stock markets and currencies against the USD was that Biden would have this wrapped up early and the postal votes would amplify his victory. That has not come to pass.

Patience is a virtue but is not something that financial markets tend to have in abundance and we see the immediate risk is an absence of certainty being filled with erroneous victory calls from President Trump’s camp – as we have already seen on Twitter – and the beginning of legal proceedings to litigate the outcome of postal/absentee ballots.

If the results begin to favour a Biden win then we expect the USD to weaken slightly although the chances of Democrats winning the Senate are razor thin and so a large slip in the dollar remains unlikely. Legal fights and delays should boost the USD as investors look for a port in a storm.

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EURUSD hit a near 4 month low overnight as the dollar strengthened on initial concerns that the Trump campaign was set to defy expectations and win the Presidency. That move has largely unwound in the past few hours but there is the definite risk of further euro weakness should the election move from the ballot box to the court room.

Meanwhile, the euro will have to navigate its run of services PMIs due this morning that are expected to slip given increasing Covid-19 precautions and lockdowns.


The pound has very much been at the whim of the USD in the past couple of days and we expect that to continue in the coming sessions. As we noted on Monday, there is the real chance that tomorrow’s Bank of England meeting manages to boost stimulus but allow the pound higher too, although that may only be available against the euro given the natural pressures that the election may have on the USD and the wider sentiment of global markets.

The UK also has its PMI from the services sector due although its use is diminished somewhat by the knowledge that the survey was taken before the decision to enter a one month lockdown in the UK.


The Chinese yuan has probably the currency that moved the most overnight as part of the back and forth of the election. At around 3am when Trump’s odds were at their highs the yuan was really on the back foot but has since rebounded and is now down 0.25% on the session.

Have a great day.