Barely has the US economy started recovering from the pandemic blow when it has faced another challenge. The presidential election is approaching. Taking into account investor sentiment in the currency and stock markets, it appears that the world's largest economy is somehow scared of the upcoming presidential election.
Both candidates are ready for a tough fight. Their approval ratings are quite similar. This is why it is practically impossible to foresee the results of the election. Investors as well as market watchers are getting more cautious as the main event of the year in the US is almost around the corner. Besides, even economic indicators are weakening amid political uncertainty. What is more, the dollar/yen pair, which is often used by investors as a safe-haven asset, is highly volatile these days. Traders conduct protective (hedging) transactions more often. They buy futures and put options on the US dollar. No doubt, market participants are trying to add more stable and less volatile assets to their portfolio as the market may become hectic quite soon. Political analysts also assume that the results of the election and the counting of votes will be disputed, which could lead to delays in declaring a winner.
The presidential election between Democratic candidate Joe Biden and current US President Donald Trump is sure to turn into a hot struggle. Both of them use any tools at their disposal to undermine each other in the public eye. Yet, sooner or later one of them will win. The only question is how will the markets react to it?
