Here’s How the U.S. Election Might Impact the Currency Market

Trump victory likely to hurt emerging-markets: Société Générale

by Joseph Adinolfi
Market Watch

Theorizing about how the U.S. election might impact financial markets has become a favorite pastime of market strategists.

Now, a team of fixed income and emerging-markets analysts at Societe General have come together to offer their two cents about how the outcome of the election could impact the currency market—specifically the dollar and emerging-market currencies, which have been part of some of this year’s most popular trades.

The team, led by Vincent Chalgneau, the bank’s head of fixed-income strategy, and Guy Stear, its head of emerging markets, concluded that a Trump victory would likely hurt emerging-market currencies as investors brace for more protectionist trade policies in the U.S. Indeed, many emerging-market currencies are already responding to tightening election polls, it appears. The correlation can be seen in the graph below:

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