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09 Nov 2020
4 min read

Joe Biden Wins US Elections: What’s Next For The Markets?

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Written by OspreyFX News Team

Joe Biden Wins US Elections: What’s Next For The Markets?

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Key Takeaways:

  • How did theĀ financial markets react?Ā 
  • WhatĀ shouldĀ youĀ lookĀ outĀ forĀ whenĀ tradingĀ thisĀ week?Ā 

As the world reels from the announcement of Joe Biden’s win in the U.S. Presidential Elections, we take a closer look at the financial marketsā€™ performance. Last week, markets ran amok as the election results developed. WeĀ are now settling down from the weekendā€™s volatility and forex traders are looking at a more stable environment for their trades.Ā 

In this article,Ā we look at specific financial markets and their reaction to the new developments in the US Elections. We also exploreĀ possibleĀ developmentsĀ that traders need to look out for in the coming weeks.

How is the US Dollar Performing as Biden Clinches U.S. Presidency?Ā 

On Monday,Ā November 9th, the US dollar plummeted to aĀ new 10-week low. This was a result of investors buying out currencies that wereĀ trade-exposed.Ā This was done on the assumption that a newĀ government led by Joe Biden would mean a calmer, more stableĀ countryĀ and this (hopefully) will reflectĀ on the currency.Ā Ā 

Taking a look at other currencies, the Chinese yuan just skyrocketedĀ toĀ a 28-month peak, the New Zealand dollar madeĀ a 19-month highĀ whileĀ the Australian dollar hitĀ a seven-week top as the dollar index fell to its lowest since early September. South Korea is atĀ a 21-month high of 1,115.33 per dollar.Ā 

The UKĀ Sterling hit its highestĀ peakĀ inĀ the last eight weeks. The euro rose 0.1%, extending an almost 2% gain from last week to hit a two-month high of $1.1895.Ā 

Looking ahead,Ā Westpac currency analystĀ Sean Callow stated: ā€œThe undertow of dollar weakness is probably going to have a bit of a way to run in terms of the Fed and also less trade tension as something positive for other currenciesā€.Ā 

Joe Biden wins US Election

How areĀ Stocks Reacting to this Win?Ā 

The stock marketĀ seems toĀ favorĀ Joe Biden asĀ investors react positively to a change in government.Ā Joe Bidenā€™s election spurred expectations that Biden will usher in a more diplomatic approach to US foreign policy and this in turn boosted global stocks.Ā In London, theĀ FTSE 100 (UKX) was 1.6% higher on Monday.Ā Ā France’s CAC 40 (CAC40)Ā roseĀ by a similar margin and Germany’s DAX (DAX) gainedĀ 1.9%.

What to Look Out for When Trading this Week?

Investors need toĀ keep a watchful eye on the news in the coming days for further developments. Last Saturday,Ā Joe Biden announced plans toĀ assemble a coronavirus taskforceĀ that should help in containing the spread of the virus.Ā This, along with other news of the pandemic, is set to rock the markets in the coming days.Ā 

It is also important to watch out for President Trumpā€™s erraticĀ behaviorĀ over the next ten weeks.Ā Brad Karp, chairman of Paul, Weiss, Rifkind, Wharton & Garrison LLP stated: “There is no telling what he might try to do and no ability to predict how the markets might react in response.”Ā 

All in all, it is set to beĀ an exhilarating week as the markets are still reacting toĀ this historic development in American politics.Ā 

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