Traders in the foreign exchange market are preparing for possible sharp fluctuations in exchange rates due to the US elections. The volatility of euro and Mexican peso options has peaked since the 2016 election, when markets were also experiencing uncertainty. These currencies are traditionally sensitive to election results, where the odds between the candidates, Democrat Kamala Harris and Republican Donald Trump, remain almost equal. Analysts suggest that if Trump wins, his policies on immigration, taxes and tariffs could increase inflationary pressures, increase bond yields and strengthen the dollar. The implied volatility of the euro reached 26.4%, and that of the Mexican peso reached 87%, levels comparable to election day 2016, when Trump's victory was recorded. On the eve of the vote, Monex Europe analysts noted that due to the high level of uncertainty, exchange rate fluctuations on the eve will be minimal, as traders are waiting for the final results. The expected weekly volatility for the euro is 13.06%, which is comparable to March 2023, when the collapse of Credit Suisse caused turmoil in the markets. For the peso, this figure reached 44%, which is reminiscent of the crisis levels of March 2020.
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