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U.S. Presidential elections cause fluctuations in foreign currency market

U.S. Presidential elections cause fluctuations in foreign currency market

03 November 2016

U.S. Presidential elections cause fluctuations in foreign currency market The U.S. Presidential elections are rapidly approaching (taking place on November 8th 2016) acting as a strong driving force in foreign currency markets. An increasing probability of Candidate Donald Trump to get elected next Tuesday, as well as the potential shift of the decision on the interest rates raise by the Fed have pushed down the U.S. Dollar exchange rate against all currencies. Uncertainty with regard to what the candidate might do if he gets elected and going forward the independence of the Fed are seen as causes for the late dollar fall reaching its lowest level in the last three weeks...

U.S. Presidential elections cause fluctuations in foreign currency market The U.S. Presidential elections are rapidly approaching (taking place on November 8th 2016) acting as a strong driving force in foreign currency markets. An increasing probability of Candidate Donald Trump to get elected next Tuesday, as well as the potential shift of the decision on the interest rates raise by the Fed have pushed down the U.S. Dollar exchange rate against all currencies. Uncertainty with regard to what the candidate might do if he gets elected and going forward the independence of the Fed are seen as causes for the late dollar fall reaching its lowest level in the last three weeks.

This uncertainty makes investors move and invest somewhere else looking for safety. As a result, other currencies have benefited from the fall of the dollar. Indeed, we have witnessed the euro the getting stronger in the last couple of days reaching the level of 0.8997 today (3rd of November).

The Swiss Franc has not stayed behind the euro. Considered a safe haven it has gained up to 2% against the euro since the beginning of October and even reached the highest point since August 2015. The Swiss Franc shows a trend characterized by a certain strength despite the SNB's (Swiss National Bank) continuous affirmations that the Franc is overpriced and its slight interventions to maintain the currency's exchange rate under an acceptable level for the Swiss economy.

Other recent events such as the sterling flash plunge at the beginning of the past month show that not even having a crystal ball could help predict some market developments. For now, we will have to sit tight and wait for next week to see which candidate will be living on the white house the next four years. However, regardless of the results it will be better to get used to even more frequent and unexpected fluctuations in currency exchange rates.

Visit our home page to check developments on the euro and the Swiss franc!

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