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Florida may give an early victory for Biden while Pennsylvania may give Trump four more years – or trigger contention. North Carolina is the most critical state for the Senate. However, there is room for surprises – and for the elections to drag, Yohay Elam, an Analyst at FXStreet, reports.

Key quotes

“What makes Florida more special in 2020 is its quick counting. At around 1:30 GMT on Wednesday, officials are set to begin releasing results, including early and mail-in ballots. Apart from that pre-processing, Florida’s counting of election day ballots is also considered rapid. Overall, a critical state that grants 29 electors will be able to provide clarity early on. A win for Biden in Florida would signal a clear path to the presidency and also higher chances of Democrats flipping the Senate and passing a generous stimulus package – good for gold, stocks (up to a point), and adverse for the dollar.”

“The Senate race is the one to watch for markets. The opposition party’s best shot is in North Carolina, where incumbent Republican Thom Tillis marginally behind Democratic challenger Cal Cuningham. If the challenger beats the incumbent, it would all but seal a Democratic majority and raise expectations for a large stimulus package. Conversely, if Tillis holds onto his seat, the opposite reaction could be seen. A Republican-controlled Senate would likely play hardball with Biden and limit the next relief package. For markets, a victory for Tillis would be a worse scenario than a win for President Trump, leading to falls in stocks, gold, and a move higher in the dollar.”

“There is a significant chance that Pennsylvania will initially show an upbeat outcome for Trump – as Republicans tend to vote on election day and these votes will likely be processed quickly. That would create a ‘red mirage,’ allowing the president to claim victory. However, the processing of mail-in ballots would likely trigger a ‘blue shift,’ meaning an advantage for Biden. The nightmare of a contested election would trigger a sell-off in markets, drag gold down and boost the safe-haven dollar. However, if Trump clearly wins Pennsylvania and is reelected without a constitutional crisis, he could push the GOP to approve a medium-sized stimulus bill that would be satisfactory to markets.” 

“Trump lost Nevada by only 2% in 2016 and according to polls, his polling among Hispanics has somewhat improved. That may lead to a surprise flip of the Western state. Other targets include Minnesota and New Hampshire, two northern states which he also lost narrowly. He is currently trailing in all three. There is always a chance that Trump voters are undetected by pollsters’ radars.

“Perhaps the biggest shock would come from Texas, a state which is worth 38 electors. The Lone Star state is usually considered “safe Republican” but demographic changes have triggered a tighter contest there. Why is early voting a factor favoring Democrats? In the past, Dems voted early but Republicans balanced the picture on election day. The answer is that high turnout means people want change – and that could result in a shock win for Biden in Texas.”