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What do you know about the USD during an election year?
In this video we look at what typically happens and what we could expect to see after the election.
Watch this video to learn more…
Hi, and welcome to this Blueberry Markets video update with me, John Kibbler, head currency analyst.
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In this video, we’re going to take a little bit of a look at the election coming up and how it could affect the US Dollar.
I’m not going to go too deep into it for this video. We may go over it again in another video, closer to the election day.
But, essentially, what I wanted to talk about is what we’ve been trying to identify for the past couple of months is looking for that sort of Dollar strength, and the fact that it hasn’t come through.
The reason why I was looking for that Dollar strength was looking at this seasonal chart. We can see on the right-hand side in an election year, which is the year 2020. Typically, we see the dollar strength, and we can clearly see from this chart on the right-hand side.
This is 49 years worth of data that the price typically does move to the upside until we get to sort of that November time where we see a little bit of a dip and that from here.
Super interesting to see how the market has performed this year. It’s done pretty much the opposite.
The earliest part of the year was very much looking at that Dollar bullishness. Saw a price really starting to rally to the upside quite significantly, and ever since that’s happened and this is obviously a unusual year as well.
Putting the sort of global crisis in terms of the global pandemic of the Coronavirus has had a huge implication on the price of the US Dollar this year.
Typically, if it was any general sort of election year. We could have been following this road map here as it has lots of data to back it up, and this is an average move of the price over that 49 years.
But, Covid has really put a damper on that usual bullishness that we see from the US Dollar. We would have actually thought that Covid would have actually helped the Dollar rally.
It did initially help the Dollar rally over that sort of March period where we saw significant numbers and large scale lockdowns globally. We saw the Dollar rally as markets ran to the Dollar as a sort of safe-haven currency.
But ever since that, the market has just slowly declined. It’s continued to push lower, and typically when we get to sort of September, the dollar does rally regardless of whether it’s an election year or not.
So we were looking for that to come through. We had this higher high through here, which we expected to be part of that rally. But ever since that, the Dollar has continued to decline. Actually, it’s performed more like a pre-election year than an election year.
So if I actually just go to the right-hand side, we can go down and we can look at the post-election years, mid-term years, and pre-election years.
And if we take a look at the pre-election year, we can see typically, it’s followed that sort of path where we have sort of March time here on the left-hand side of I look at March on the seasonal plays it forms a low and the market rallies up and then we dip for the rest of the year.
Which is pretty much what we’re seeing here on this chart on the left-hand side. So maybe, we’re following more of a pre-election year plan where the market is just dipping and looks too likely to continue going through to December.
Despite what we saw in the election, we also saw a continuation of this Dollar weakness.
Now, we’ll go through in a little bit more detail closer to the time. But this is the sort of the first video we’ve covered on the US election video.
The fact that the Dollars not following the seasonal play, suggests to us that obviously the global pandemic is having that larger-scale impact on the average or what the average price usually does typically around these sorts of events, and it’s kind of following more of a pre-election year plan than it is the election year plan.
So I hope you found that video interesting. I’ll catch you in one soon. If you have any comments questions, drop them below.
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