The markets are on a strong rally, reflecting what appears to be a high confidence in a Donald Trump victory for the 2024 U.S. presidential elections. Current odds, reportedly favoring Trump with a 98% chance to win, are driving this upward momentum across various asset classes. Despite the official results still pending, Wall Street is reacting with significant optimism, fueling indices to surge higher in anticipation of a Trump administration. This is also aligned with the general sentiment that the financial markets often associate with Trump’s business-friendly policies.
The U.S. dollar is gaining robustly, boosted by the expected outcome, with notable strength observed against European currencies. The Canadian dollar is also riding this wave of optimism, possibly due to anticipated favorable trade and economic policies that might impact North American trade relations. On the other end, European currencies like the euro and pound are seeing declines, pressured by the strengthening dollar and market shifts.
In the commodities market, the strong dollar has weighed heavily on precious metals, causing gold and silver to lose ground. A stronger dollar typically makes dollar-denominated assets more expensive for holders of other currencies, contributing to this downward movement in metals. Oil is also on a sharp decline, further impacted by dollar strength and potentially speculative shifts in anticipation of upcoming energy policies.
Looking at today’s economic calendar, Wednesday is notably quiet, with only the construction PMI from the UK and the Ivey PMI from Canada scheduled. These releases are unlikely to create significant shifts, given that all attention remains on the U.S. elections. As the day progresses, the market will be tuned to any updates or surprises in the election results, with each piece of information likely to trigger swift reactions across assets.
With the markets already showing this much momentum, traders are positioned for an eventful day, with every new development expected to bring waves of volatility across currencies, commodities, and equities.