Even in the COVID world, historical patterns still emerge, and one of the biggest patterns of the past is the ‘8-week mark’ leading up to a US Presidential election.
FX, equities and to some extend commodities have been trading on the re-opening global economy (as they should) and have exploded.
However, the fact that late last week the US equity markets began to sell off and the USD started to climb that ‘8-week pre-election pattern’ caught our attention for good reason.
If we look back at US elections, even including the unexpected Trump election in 2016, equities, on average, ease and the USD appreciates. There is no reason to think 2020 will be different, even with a controversial President and a once-in-a-generation pandemic.
Many would agree that a pullback in equities was coming ahead of both fundamentals and technicals. However, there is a clear sign that the US Presidential election is beginning to creep into trading. Something that will build further leading into the first Presidential debate on September 29.
From there, dates to watch include 15 and 22 October which are the second and third debates and then the day that matters is 3 November.
Going forward, the dollar basket is the market to watch and considering it’s coming from a very low base having been sold off in droves in the past 4 months, a steeper than normal 8-week Presidential election trade could eventuate, especially as the polls narrow and polls from swing states get released.
We are moving into an interesting short-term period, one that is likely to present interesting trade opportunities, but we will also see strong bouts of volatility, so be on guard for gapping and trade spikes.
The content presented above, whether from a third party or not, is considered as general advice only. This article does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Mitrade does not represent that the information provided here is accurate, current or complete. For any information related to leverage or promotions, certain details may outdated so please refer to our trading platform for the latest details. Mitrade is not a financial advisor and all services are provided on an execution only basis. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks. *CFD trading carries a high level of risk and is not suitable for all investors. Please read the PDS before choosing to start trading.