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J.P. Morgan comment on USD reaction to U.S election

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By Mostafa Mahmoud
J.P. Morgan comment on USD reaction to U.S election
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J.P. Morgan: “We estimate that FX prices in 60-70% chance of a Trump victory. G10 (The ten major forex currencies) election volumes have rebounded pre-election, hitting new cycle highs in many cases while a Harris victory with Split Congress sees USD weaker.
Positioning to witness USD upside, and a probability for USD shorts in a Harris victory.
Macro Trade Recommendations: (long JPY vs CAD, EUR) (short EUR/USD).
Technicals: EUR/USD rebounds from 2023-2024 trend line support. EUR/GBP attempts to base above longer-term range support.
USD/JPY rally stalls near the 153.505 Jul 61.8% retrace and Aug-Sep pattern objective.

Emerging Markets FX: MW EM FX keeping positions light. Our favourite election hedges are short CNH, PLN and newly CZK in options. Stay long TRY and ILS, which we expect to be resilient.

FX Derivatives: Election premium rebounded to a cycle high. Scandies and Antipodeans lag. Premium roll-off should see 1M vol down by about 1.5vol pts. Trump post-election win trade: topside USD and vol ownership. For Harris: USD skew harvesting in CNH, SEK or NOK, and high-beta G10 USD-puts vs low-beta USD-puts RV.

Stay informed about global markets through our previous analyses. and Now, you can also benefit from LDN company services via the LDN Global Markets trading platform.

Mostafa Mahmoud

Mostafa Mahmoud Technical Analyst at LDN Mostafa has half a decade of experience in the field of financial markets between technical analysis and financial portfolio management, which extends to more than one financial market between stocks, commodities, currencies and the debt markets.

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