American voters will be heading to the polls this November for the presidential election. Has it really been four years since the last one, and what can we expect to see on the currency markets as the vote looms closer? Read Currency Solutions’ explainer to find out more …
The election on November 3 will determine who gets to lead the US as President for the next four years. It’s a straight-up fight between the Democratic Party and the Republican Party, with recumbent President Donald Trump hoping to hang onto power for another term. It goes without saying the Democrats will be doing everything in their power to ensure he is not re-elected, while the Republicans will hope that their track record on the economy and other key issues will be enough to secure victory.
In the case of the Republican Party it is practically a given that Donald Trump will be the main candidate (although not 100% certain – stranger things have happened … but with a 94% approval rating in his party, it’s virtually a given that the 73-year-old ex-real estate mogul with a fondness for Twitter will be selected). However, in the case of the Democrats, they are in the process of picking their candidate via a convoluted and sometimes confusing set of preliminary local rounds known as primaries and caucuses.
In the primaries, individual states hold elections to decide which of the main candidates for a particular party will be put forward. These can either be open to all, or only to registered party members, and whoever wins gets to go onto the main party convention where a final winning candidate will be selected.
In the caucuses, which are not state-run, the parties have more freedom to set the rules for election. In some, for example, no ballots are cast, and candidates are selected based on the number of people standing up in a room and showing their support.
The Democrats are split over whether their candidate should be a moderate or a radical. Moderates lean towards allowing business as usual, while radicals may favour root and branch reforms, the Green New Deal, and wealth distribution.
Out of the remaining contenders, former Vice President Joe Biden is the frontrunner, with ex-New York City Mayor Michael Bloomberg (net worth $65 billion) also in the running. Mr Biden received a further boost on ‘Super Tuesday’ when a number of contenders bowed out and threw their support behind Obama’s former VP.
On the radical side of the field, Bernie Sanders is the clear leader and enjoys a huge support base due to his firm stances on green issues and wealth redistribution. Elizabeth Warren is also considered a radical, although she has fallen behind in the running at this stage.
The Democratic contender will be confirmed in July at the main party convention in Milwaukee, Wisconsin.
According to a poll by Gallup, Americans are most concerned with the issues of healthcare, gun ownership and national security. Surprisingly, the economy only came in at number five on the list, although that could change if stock markets continue to plummet on coronavirus fears.
The US economy has performed well under President Trump – something he often likes to remind voters of. If there is another Republican win, markets would be encouraged by Mr Trump’s track record. Even if he were to lose the election to a moderate Democrat the markets would likely still take it in their stride and the US Dollar would be bolstered.
On the other hand, markets are generally wary of a radical Democrat in the White House, so a win for Bernie Sanders or Elizabeth Warren could spell market turbulence and a flight from the US Dollar.
At present, bookmakers William Hill give President Donald Trump odds of 7/4 to win another four years in power, making him the clear favourite as far as individual candidates go.
On the Democrat side Michael Bloomberg is at 8/1, Joe Biden is 9/1 and Bernie Sanders is the favourite at 11/4. Elizabeth Warren is far behind at 80/1.
But a lot can happen over the coming months and events can drive odds either way, meaning the race for the presidency is likely to go right down to the line.
In particular it remains to be seen how much fallout there will be for President Trump at the ballot box as a result of the impeachment proceedings brought against him, as well as how he is judged by voters on his handling the coronavirus outbreak.
US presidential elections can have marked effects on currencies, with investors fleeing to safe haven currencies if they feel spooked or flocking to riskier currencies if they feel safe. This type of behaviour can really affect exchange rates, so you’ll want to make sure you’re not caught out.
If you have any currency transfers on the horizon and want to hedge your risk against potential upsets, then get in touch with us and we’ll talk you through your options. After all, it pays to take the best and safest approach to your currency transfers, whoever ends up in the White House this November.