Voting in the US election 2016 has already started in some minor towns, with USD EUR exchange rates flat as markets nervously await the results.
- USD EUR exchange rates flat – US electorate heads to the polls
- EUR also weakened by data – German industrial production disappoints
- Clinton or Trump to win? – Polling data shows Democrat ahead by 3%
- USD EUR exchange rate forecast – Market volatility expected regardless of victor
The Euro is being kept soft by the latest developments in the States, with little in the way of support from the day’s largely disappointing German data.
USD EUR Exchange Rates Soft as Trump Claims Election Victory
UPDATE, 12.56, 09/11/2016; In an eerily similar manner to the night of the Brexit referendum, markets watched in shock last night as Donald Trump defied almost all predictions and polls to edge ahead in the White House race. With four states left to declare, the Republican already has a majority of 278, after taking key battleground states such as Florida. A total of five key states swung from Democrat to Republican in this election, spelling doom for Clinton’s chances of success. The USD EUR exchange rate is still in negative territory, although it has managed to narrow losses considerably in a potential sign market volatility is already subsiding.
Polls Open in Key Election Battlegrounds; US Dollar Remains Weak
UPDATE, 16.06, 08/11/2016; The polls have opened in some of the key states that will decide the victor of the 2016 US presidential election race. Ohio and Florida, offering 18 and 29 Electoral College votes respectively, have the power to block the Trump presidency should they both declare for Clinton. According to the media, there has been a strong turnout amongst Latino voters, which could work in Hillary Clinton’s favour given the divisive remarks and policies, particularly those concerning Mexico, made by Donald Trump.
US Dollar Euro Exchange Rate at Opening; Both Currencies Soft Ahead of Polling Day
The race to become the 45th President of the United States is nearly over, with just a few hours to go until the US polls open and millions of Americans cast their votes. The battle for the Oval Office is much tighter ahead of polling day than markets and experts would have expected this time a couple of weeks ago. An announcement by the FBI that is was reopening an investigation into Hillary Clinton severely weakened the Democrat’s lead in the polls; in some instances allowing Republican Donald Trump to edge ahead. The USD EUR exchange rate weakened, although the news also unsettled Euro investors, helping to curb the extent of US Dollar losses.
Even the FBI clearing Clinton of criminal wrongdoing for a second time over the weekend failed to undo the damage to her campaign, leaving the polls much tighter than investors would want. The US Dollar Euro exchange rate still trended bullishly, however, thanks to trader relief. According to the Real Clear Politics average tracker, Clinton currently leads by 3 points at 47.2%. The Telegraph reckons Clinton has a total of 206 seats in the Electoral College already either secured or likely to vote in her favour, compared to Trump’s 164 secure or leaning. There are 168 toss-up seats that could be claimed by either candidate; Clinton needs 64 seats to claim a majority, while Trump needs 106.
With California very strongly Democrat and Texas staunchly supporting Trump, the focus will fall to Florida; which is the third largest state in terms of Electoral College votes and therefore the largest swing state on the map. With 29 seats up for grabs, winning Florida would close Clinton’s gap to a majority by almost a third.
The US Dollar is currently soft today however, as markets remember the shock caused by the UK’s referendum vote and reign in their early exuberance.
Domestic Data Further Cools Euro Appetite as Investors Await Vital US Polling Results
The approach of the US election results is also weighing on the Euro today. Investors are reluctant to adjust their positions ahead of the results, despite the fact that a weakening US Dollar is usually positive for the Euro.
US election jitters aside, the day’s Eurozone data is not particularly conducive to EUR USD strength. German industrial production fell -1.8% on the month in September; down from an upwardly-revised 3% in August and over three times the rate of decline forecast. Monthly production growth weakened to 1.2% instead of printing at 2% after the previous figure was revised up to 2.4%. While the trade balance climbed to an above-forecast 24.4b, the current account surplus clocked in at a below forecast 24.2 billion as the previous figure was slashed to 17.4 billion.
USD EUR Exchange Rate Forecast; What are the Latest US Election 2016 Predictions?
It currently looks like Clinton will win the White House, which would support USD EUR exchange rates higher. However, as the Euro has weakened in line with the US Dollar, the ‘Greenback’s recovery might be slowed.
Analysts are warning that the possibility of a Trump victory is not as remote as the markets seem to believe. While a Trump victory would likely see the US Dollar tumble versus the Euro – with investors piling into the common currency like what was seen before the weekend – there is a third prospect that is even worse for the markets.
Given the closely-fought nature of this election, there is a chance the voting will not conclusively settle the matter after the initial count. Economist at SEB, Andreas Johnson, explains;
‘The tightening of the polls indicate that the risk of a very close result is substantial. In this scenario the election result could be up for challenge and equity markets could suffer from a prolonged period of uncertainty. The 2000 presidential election resulted in a month of uncertainty and such a scenario could weigh heavily on stock markets.’
Interbank USD EUR Exchange Rates
At the time of writing the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.90 – within just a few pips of its opening level – while the Euro US Dollar (EUR USD) exchange rate was trading around 1.10.