FX: How To Trade Georgia & Electoral College Votes

The most likely scenario however is that both votes end the way we expect them to. That means one or both incumbent Senators in Georgia retain their seats and Congress certifies Biden’s victory. These outcomes would reinforce the rally in equities and currencies. Japanese Yen crosses should benefit the most with broad-based gains in high beta currencies. The US’ political drama will finally come to an end and investors can move onto new 2021 themes.

Wednesday’s FOMC minutes will take a backseat to all of these political developments. We know that the Federal Reserve is dovish and there’s very little reason for their stance to change. The Australian and New Zealand dollars were the day’s best performers, which is no surprise given their impressive control of COVID-19 and summer recoveries. EUR/USD rose above 1.23 on the back of US dollar weakness and stronger German data. Despite virus restrictions German retail sales and unemployment change beat expectations. Eurozone PMI revisions and inflation data are due for release tomorrow – none of these reports are expected to have a significant impact on the euro.

Sterling also traded higher despite new lockdown restrictions. With a highly transmittable variant of COVID-19 raging across the country, Prime Minister Boris Johnson reimposed some of their strictest lockdown measures as new virus cases exceed 60K for the first time ever. To put this into perspective, it is estimated that roughly 1 in 50 people now have the virus in England. The new restrictions include closing all secondary and primary schools, issuing a stay at home order that only permits limited outdoor activities, and preventing travel of any sort around the UK unless for non-essential reasons. These restrictions are expected to remain in place through the middle of February. Sterling managed to shrug these measures off because the government also unveiled $6 billion in new support for the economy.

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