If those dabbling in Asian currency markets are nervous about a Donald Trump presidency arriving in early November, they’re not showing it at for the moment.
Take this charts from ANZ as evidence.
It shows two charts. The first, the relationship between the US dollar versus the Mexican peso to the spread between Hillary Clinton and Donald Trump in the polls. The second chart is similar, merely replacing the peso for a broader Asian currency mix that includes everything from the Chinese yuan to the Singaporean and Hong Dollars, and a whole lot of emerging Asian currencies in between.
There’s been a noticeable divergence between the two, particularly since May.
The peso has been smoked, while Asian markets have been rallying. Mexico is an emerging economy, like most of the nation’s in the Asian basket.
“At this point, apart from USD/MXN which has reacted to the rise in Donald Trump’s polling, there is not much political risk premium that has been priced into Asian currencies or asset markets in general,” say ANZ.
“Our FX strategy team sees the USD benefiting from a more expansionary fiscal stance in the US under either candidate, especially if accompanied by a tightening in monetary policy.
“That would make the US the only major economy to run loose fiscal policy and tighter monetary policy at the same time, a combination that is usually favourable for the currency.”
Favourable, but seemingly a not a concern for investors. At least not yet.
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