Election Anxiety, Virus Reality
If you're going to panic, it's always better to panic early than to panic late.
A clear picture of US election night is beginning to take shape. Trump is trailing in the polls but certainly not out of the race and no one can forget his comeback against Hilary Clinton. Polls show the far more voters than in 2016 are already in the 'decided' camp so in all likelihood we will be going into election night in something close to the current state of affairs.
The nightmare scenario is that on election night Trump appears to hold a narrow victory but as mailed in votes (which favour him) arrive in the following days, Biden takes a lead. Given his recent comments, Trump will undoubtedly dispute the election. Even if he loses on election night there's a good chance he disputes it.
Along with that, it's looking increasingly likely that we will have climb in COVID in the months ahead and no US stimulus.
The question then is: How much risk and volatility can you tolerate in the lead up?
None of this is particularly new but with just over five weeks to go until the election, the state-of-play has crystalized. It's left traders – particularly equity traders – facing the choice of whether to head to the sidelines or weather the storm. News that brokers have cut leverage is making it an easier decision.
As for FX, the recent declines in commodity currencies along with a number of technical breaks make a compelling argument for caution.Watch Ashraf's Premium video above for the latest on the intermarket technical picture.
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