Today marks the conclusion of an acrimonious US Presidential race, with two candidates promising very different approaches to handling the US economy. As a result, analysts have been furiously mapping out the potential impacts of either result.
If Clinton wins:
Analysts at ING predict that in the case of a Clinton win USD will retrace its pre-election losses and re-couple with Federal Reserve expectations.
“Latest breakout of wage growth from post-crisis range means a Clinton win should see markets (fully) price in a Dec Fed rate hike,” they note.
“Following the US election, global markets have reacted in predictable panic. Equity markets [and] the dollar sold off and gold rallied,” notes Kerim Derhalli, CEO of invstr.
Profit & Loss previously reported on the immediate aftermath of the surprise US election victory for Donald Trump, but the question facing markets now is: what next?
“Key will be now whether or not Trump will prove to be a populist or a pragmatic president,” says Valentijn Nieuwenhuijzen, chief strategist and head of multi-asset at NN Investment Partners.
As FX markets continue to anticipate what will happen next following Donald Trump’s surprise victory in the US Presidential election, there could also be significant changes in the country’s regulatory landscape that financial services firms need to consider.
For starters, the Commodity Futures Trading Commission (CFTC) could look very different.
Historically, when there’s a transition of parties, the Chairman of the Commission has tendered their resignation on the inauguration day of the new President and then the remaining Commissioners vote amongst themselves for an acting chairman.
With the immediate market risk of the US elections having diminished, Saxo Bank has returned its margin requirements to normal levels, with the exception of GBP pairs.
Saxo raised margin requirements ahead of the US election to try and ensure that its clients were appropriately leveraged going into what it expected could be a significant market event.
It raised the requirements on most major FX pairs up to 2%-3%, with MXN and RUB going to 15% and 10%, respectively. Claus Nielsen, head of markets at Saxo, comments:
Donald Trump’s position on the currency manipulation provisions in US trade deals could lead him into direct conflict with US Treasury once he assumes the presidency, according Dick Cunningham, a senior international trade partner at Steptoe & Johnson’s Washington office.
Speaking on a webinar examining some of the implications of this week’s US presidential election, Cunningham noted that Trump has vowed to kill the proposed Transatlantic Trade and Investment Partnership (TTIP).
One reason why Trump has criticised the TTIP in the past, said Cunningham, was because although it contains a currency manipulation provision, the provision is not enforceable.
Comments made Sunday by US president-elect Donald Trump on Twitter have sparked fresh speculation as to whether his administration will label China a currency manipulator once he is in office.
China lodged a formal complaint to the US government after it emerged that Trump held a phone call with the President of Taiwan on Friday, in breach of decades of diplomatic protocol.
“I can tell you that the Chinese side has lodged solemn representations with the relevant party on the US side both in Beijing and Washington. China has got its message across to the world as a whole with regard to Taiwan-related issues. The US side, president-elect Trump's team included, is also fully aware of China's solemn attitude on the issue,” said the Chinese Foreign Ministry spokesperson, Lu Kang, in a press conference today.