The USD continues its post election rally
The final two weeks of the U.S. presidential elections were filled with high stakes drama as another FBI investigation on the Democratic candidate's emails joined a sexual harassment scandal involving the Republican candidate. The USD lost ground across the board as risk aversion gripped investors that were having a hard time focusing at the economic fundamentals with so much political noise.
Election night proved to one to remember as the initial shock of early returns showed Donald Trump building a sizeable lead, that he would not relinquish. As the elections moved off script, the EUR/USD broke above the 1.12 price level but could not hold. The end of the EUR rally was the call from Clinton to concede the election. The uncertainty was completely gone at that moment and markets priced in the end of the elections with the USD appreciation that continues today.
The end of the electoral process was always going to favour the USD regardless of the outcome. The surprise result added extra volatility, but ultimately the economic data favours a strong dollar ahead of the U.S. Federal Reserve monetary policy decision on December 14. The interest rate divergence should widen as expected regardless of the change in leadership in America. Safe haven assets like gold have lost their lustre and the NAFTA pairs (CAD and MXN) are down on speculation of trade terms renegotiation. There are lots of unknowns about how big Washington will change under Trump's management and the markets will react accordingly.