The US presidential election race begins on Tuesday, November 3, and financial market expectations are in favor of witnessing strong moves in the markets. Therefore, traders should be careful when dealing with financial markets in this period of volatility and instability.
During the article, we will shed light on the most important scenarios that financial markets may witness in the event that Donald Trump or Joe Biden win the presidential election, and how financial markets can be traded during this period.
Expectations indicate that in the event of Biden win, we may witness a decline in the US dollar at the expense of a recovery in the Chinese yuan and the Australian dollar, given the improvement in relations between the United States of America and China if Biden wins.
On the other hand, Donald Trump's victory with a new presidential term will push the US dollar to rise significantly, as he will find support from being a safe haven in the markets, in addition to the weakness of the Chinese yuan and the Australian dollar due to concerns about the continuing tensions between the United States and China during the Trump era.
Regarding the movements of gold, we predict that price levels may rise with the increasing demand for it as a safe haven in the financial markets due to uncertainty about Biden's policies, in addition to the decline of the US dollar, which will support the rise in gold prices significantly.
But in the event that Trump wins, we may find gold a bit neutral or may suffer a limited decline due to the expected strength of the US dollar in the event of Trump's victory, and we may witness strong movements in the prices of other commodities.
US stocks, on the other hand, may experience a consolidation in their levels if Biden wins, but caution will control their performance, especially as stocks in the Trump era witnessed a record increase on the back of the reduction of corporate taxes. In the event of Trump's victory, we may see a remarkable recovery in the stock markets, especially as Trump's policies greatly support corporate shares, in light of his work to reduce corporate taxes and greatly encourage the investment climate.
In light of these expectations that will affect the movements of all financial instruments significantly, there are a number of tips that must be taken into account when trading during this volatile period:
1- The beginning of fluctuations in the markets may be on Wednesday at 04:00 GMT, as it is when the initial polls of the presidential election results will appear.
2- Do not rush to predict results because the 2020 election are witnessing millions of Americans voting via the email more than ever before, which results in a long delay in counting the votes and announcing the preliminary results.
3- Focus your trades on the financial assets that you trust the most, with the need to monitor price movements and your financial positions during the periods of volatility.
4- Stop loss and take profit orders must be used in light of violent fluctuations in the markets.
5- Use hedging trading strategies that help you manage risks in the best way.
6- Focus on the US dollar and its movements, as it grabs attention during the US election, even in the case of trading on other financial assets.
7- Finally, avoid
trading during these periods may be a good option for some traders.