US: A shift towards Donald Trump in the last few weeks – Commerzbank

FXStreet Insights Team FXStreet

The US Dollar (USD) has been pretty strong over the past four weeks, even if it has slowed down a bit in the last few days, Commerzbank’s FX analyst Volkmar Baur notes.

Betting offices think Trump is more likely to win

“Since summer, it seems that the US dollar has been following the odds on whether Donald Trump will win the election. According to Realclearpolitics.com, which tracks several betting agencies for this purpose, this probability was recently seen at around 66%. At the beginning of October, we were still below 50%. As a result, the trade-weighted US dollar also saw a significant gain.”

“The issue here is, the polls and the models don't see the probabilities as clearly as the betting shops do. Let's look at the two most well-known models for the US presidential election: the one from fivethirtyeight.com and the one from The Economist. The first of them also showed a shift towards Donald Trump in the last few weeks. But the odds are still only 52% to 48% in Trump's favour, which is a lot lower than the 66% you see in the betting shops. The Economist's model says it's a tie between the two candidates.”

Harris even managed to make up some lost ground in that model over the last few days. The models are based on fundamental data and a lot of surveys, and they still suggest it's too close to call. But the betting offices think Trump is more likely to win. It seems that the US dollar is more influenced by the betting offices. This could end up being a bit of a letdown.

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FXStreet Insights Team

FXStreet

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