FX: How To Trade Georgia & Electoral College Votes

The US dollar traded lower against all of the major currencies on Tuesday. This broad-based decline is a reflection of the market’s concerns about how the US political and economic landscape could change in the next 24 to 48 hours. There are two Senate runoff elections in Georgia that will determine which party controls the Senate. Polls close at 7 pm Eastern Time but if it's very close, it may be hours or days before the final results are known. These Senate elections are important because they determine what type of policies will be passed over the next four years. If Raphael Warnock and Jon Ossoff, the Democratic candidates win, the Senate would be tied 50-50 Republicans and Democrats, giving Vice President-elect Kamala Harris the tie-breaking vote.

Under a Blue Senate, President-elect Joe Biden would have a much easier time passing a major stimulus package and fund it with higher taxes. If Warnock and Offsoff win, look for a knee-jerk sell-off in currencies and equities. If just one Republican candidate wins, currencies and equities should extend their gains. Over the past few months, stocks hit record highs on the expectations for a divided government that will keep taxes low and limit major policy changes.

10 and one 10 us dollar bill

Image Source: Unsplash

On Wednesday, the Electoral College votes will be counted by Congress. This is normally a procedural affair that gets very little attention but this time, a dozen Republican Senators have said they will contest the votes in 6 swing states. The last time this happened was in 1887. In order for a state’s vote to be officially recognized as an objection, there needs to be a written document signed by one member of the House and one member of the Senate. Then vote-counting is suspended and both chambers will debate the vote and decide whether to sustain the objection and for the state’s vote to be dismissed, it needs to be sustained by both houses. This has never happened in the history of the Electoral College. If even one state’s vote is officially objected preventing the 2020 election results from being certified, currencies and equities would sell-off in confusion.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.