Reaction to the election.
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Thread: Reaction to the election.

  1. #1
    The dollar moved down during the oriental and european session resulting into the voting. The beleif is that Democrats are expected to obtain control of the senate and the house. At this point I'm assuming that the market is currently saying that management is dollar negative.

  2. #2
    I forgot where I heard this; I heard that Democrats are anti big business while republicans are big business friendly....

    No wonder democrats are now winning. . They need to be little folks friendly

  3. #3
    Quote Originally Posted by ;
    I forgot where I heard this; I discovered that Democrats are anti big business while republicans are huge business friendly....

    No wonder democrats are now winning. . They need to be little folks friendly
    I believe that's pretty much universally approved analogy.

  4. #4
    By Wachovia:

    We mentioned today's midterm elections in yesterday's report, and we need to expand on that subject today. As we wrote yesterday, the most bearish scenario for the dollar would be a big night for Democrats (i.e., not just do Democrats gain a majority in the House but in addition they take the Senate). Conversely, Republicans keeping control of both houses of Congress are the most bullish scenario for the greenback. Due to their ties to labour, Democrats are seen by market participants as favoring a weaker dollar which would help constrain imports and to spur exports. (This perceived bias conveniently ignores the reality that the strong dollar policy has been coined by Robert Rubin, who served as Treasury Secretary under President Clinton.)
    In our opinion, however, any effect on the dollar out of the elections will be very short lived. Dollar coverage is the domain name of the U.S. Treasury Department, and Secretary Paulson isn't going anywhere irrespective of which party management Congress. Moreover, U.S. economic policy will not change significantly over the next couple of years. Together with President Bush still in the White House, the likelihood of tax hikes is low. The main point is that the election will probably have little effect on the U.S. economic outlook and, therefore, ought to have few impliions for dollar exchange rates. Even though the greenback could react once the election results start to print, the effects should be short lived.

    I'd think there's a fantastic chance the $ will probably gainback a number of it is loses today regardless of what happens-but if the republicans keep control of congress (or even just the senate) we could really find a fantastic quantity of today's action retrace...

  5. #5
    While Wachovia's analogy makes sense, I think when the Republicans pull of a huge surprise the dollar will rally past what they may consider rational.

  6. #6
    I wonder whether the republicans do nicely, the dollar is rallying firmly now will be the weakness at the european, japamese and early US session?

  7. #7
    Quote Originally Posted by ;
    While Wachovia's analogy makes perfect sense, I think if the Republicans somehow pull of a big surprise the dollar will rally beyond what they might consider logical.
    While the description matches the typical stereotypes, I believe the keyword here for the dollar is stability.

    The dollar perfers Harmony (meaning that a governmental majority). This has been true from the case when the house, senate and presidency were squarely in the hands of republicans OR democrats.

    Since it would seem that democrats will at least take the home, this produces a tougher feeling for pushing through policy, and therefore creates the illusion that things will pretty much stay the same (from a policy stand-point).

    When the republicans would retain control of both the house and the senate, then there is a perception that there could be slightly more attention on inflation and monetary policy that is seen as positive for the dollar.

    Personally, I believe this is why you are seeing dollar weakness (the democrats seem to take control of at least the house).

  8. #8
    I concur with wachos analysis there...

  9. #9
    Damnit - I am short GBP/USD... I knew I must have voted Republican!

  10. #10
    According to CNN, it seems to me that Republicans may end with a clear win in the Senate (needing only 8 votes into bag majority). .

    Lower house is still up for grabs though.

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