We all know the US is the world’s largest economy. It accounts for 24% of the global GDP. However, its impact on global financial markets can be even larger. The US equity market represents 48% of global total, and is worth $44.7T. Almost half of the world’s financial markets are in the US. And, of course, the dollar is the world’s reserve currency.
Therefore, it is expected that the country’s political fortunes will have global repercussions. This is especially true when you consider that the fiscal policies of both parties are very different. The election hinges on an important factor that can have huge implications for forex, according to pollsters.
What’s at stake
Trader should be cautious around election season and not let political preconceptions stop them from predicting the market. Famously, George Soros lost over $1B in market bets when he predicted the election victory of Donald Trump. It’s not just who wins the election, but what they actually enact subsequently that drives markets.
According to pollsters, Republicans are likely to win control of the lower House. The Senate control is still viewed as a toss-up with many key races being close in the…