Dollar moves, as outlook brightens for Trump in Georgia

Georgia

A number of polls in the US have closed, including Indiana, Georgia and Kentucky. Georgia is the most important, since it is the first swing state that’s closed its polls. The results in Georgia are important for Trump’s chances of winning the overall vote. Back in 2020, Joe Biden just about won Georgia in a drawn-out contest that included legal challenges. The Trump team will be looking for this state to flip back to the Republicans. Overall, at this early stage, Trump is up in Georgia, however, it is early days, and it could take some time before we know the final result.

Independents boost support for Trump

The early sign from Georgia is that there has been a huge turnout in people calling themselves independent, and there has been a huge swing in independent voters switching allegiances to the Republicans. The CNN exit poll shows a 20-point swing in independents in Georgia from Biden in 2020 to Trump in 2024. If this holds true, then it suggests that Georgia could go to Trump which is bad news for the Harris campaign.

Florida

Early indications put Trump in the lead. Florida is considered a ‘pale red’ state, with some pockets of support for the Democrats, however, Trump was always expected to win his home state.

In contrast to the bad news for Harris in Georgia, the CNN exit poll on favourability of the two candidates, found that 46% of voters had a favourable view of Kamala Harris vs. 42% for Trump. This is a bigger vote share for Harris than expected, but it is still difficult to use this data to call a big win for Harris at this stage. Exit polls in the US differ from the clear-cut exit polls in the UK. Rather than ask voters straight out who they voted for, they have a variety of other questions that don’t provide much clarity.

Key early-stage market moves:

• S&P 500 futures are rising as the first polls close.
• The dollar is strengthening, and GBP/USD is back below $1.30. Any sign that Trump is in the lead could lead to a burst of support for the dollar, however, we expect it to be a volatile night.
• Gold is mildly lower.
• US stocks rallied on election day with solid gains above 1% for the S&P 500 and the Nasdaq.
• US stock index futures are slightly higher as we wait for the results.
• Treasuries staged a rally, and US 10-year bond yields fell slightly. The 2-year yield was flat.
• Volatility: bond market volatility fell back on Tuesday, although the BOA Move index of bond market volatility is still at its highest level for more than a year.
• The Vix index also fell back 2 points from 22 to 20.

We think that financial markets were wiping the slate clean on Tuesday, and that the real moves will happen once we have a better idea of who will win the election. The positive signs for Trump in Georgia is already boosting the dollar, and it suggests that USD is very sensitive to the results as they get announced.