The most highly anticipated trading month of the year is finally here…
November will not only see the biggest trading event of the year – the U.S Presidential Election, but also the Federal Reserve and Bank of England’s latest interest rate decisions alongside U.S Non-Farm Payroll data as well as new wave of major global lockdowns across UK, Europe and the U.S.
On Tuesday, U.S voters will head to the polls in what is expected to be ‘the most controversial U.S Presidential Election’ ever in history.
According to polling data, there are growing expectations of a blue wave in Washington with the Democrats taking control of Congress and the White House, however memories of 2016 continue to loom large on the horizon, so at this point, anything is still possible.
Enviably, there will be huge volatility in the lead up to the election on Monday and Tuesday, which will setup some incredibly lucrative trading opportunities throughout Wednesday, Thursday and Friday, as the results become clearer.
No matter who wins, one thing is certain – there is going to be a significant stimulus deal coming soon!
The government will have to continue to support the U.S economy, businesses and consumers who have been impacted by the global pandemic. The only question is, how much stimulus will be passed and when?
If Joe Biden wins the presidential election – he will be inaugurated on January 20th and will likely take the oath of office that same day. In this scenario, a much-needed stimulus deal may not come until the end of January 2021.
On other hand, should President Trump get re-elected the U.S economy could get a new coronavirus stimulus deal much faster. On Friday, President Trump promised “we will have a tremendous stimulus package immediately after the election.”
The biggest unknown is whether the election results will be known right away. The worst-case scenario for markets would be a contested result as that delay’s any potential stimulus package and increases the risk of a slower economic recovery.
In recent weeks, U.S President Donald Trump has been furiously sowing distrust of the legitimacy of the electoral process and especially of postal votes, calling this “the most corrupt Election in American History”.
A contested election and prolonged dispute over the U.S presidency could last months and end up in court, which bring back memories of the 2000 election, when George W. Bush and Al Gore furiously battled over a recount and ultimately had to go to the Supreme Court to settle the matter.
Once again, the result could end up hanging on a decision of a Supreme Court, which could stretch into January 2021, until a winner is final decided.
Whatever the outcome, the Presidential Election is guaranteed to deliver explosive moves across the global financial markets throughout November.
Elsewhere this week, traders will be closely monitoring the Federal Reserve’s FOMC policy meeting the day after the election. Historically, this is the first time the two events have occurred in the same week since 1984, when the FOMC did not hesitate to move the financial markets by unleashing billions of dollars in quantitative easing.
The Bank of England also is meeting on Thursday and is in a similar position to the Fed. With the UK heading back into a full lockdown this week – there’s growing speculation that the Bank of England could unleash new stimulus measures to support the economy and may even introduce negative interest rates, sooner than expected.
Extraordinary times create extraordinary opportunities and right now as traders, we are living in some of the most rewarding times ever in history.
Where are prices heading next? Watch The Week Ahead Commodity Report now, for our latest price forecasts and predictions.
Trading has large potential rewards, but also large potential risk and may not be suitable for all investors. The value of your investments and income may go down as well as up. You should not speculate with capital that you cannot afford to lose. Ensure you fully understand the risks and seek independent advice if necessary.