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Analysts at TD Securities suggest that the wait is finally over and while the political pundits will have their 15 minutes of fame in the news cycle, the repercussions of US midterm elections will resonate in FX.

Key Quotes

“The risk is binary for the USD in our view, and a divided Congress should yield some USD consolidation in the coming weeks.”

“The USD appears excessively strong relative to data surprises, but roughly fair across a host of market variables suggesting that the gap in the former could be closed if a divided government holds true.”

“In the event of a surprise, we highlight some considerations to be mindful of and signposts for G10FX. While a Republican sweep would offer better prospects of fiscal initiatives, there may be some headwinds as it relates to tax cut 2.0 (such as the 2020 fiscal cliff).”

“A divided Congress should offer support to the reserve currencies, but we think the antipodeans still offer an interesting RV play.”