Mind the Exit Polls

Posted Tuesday, November 8, 2016 by
Skerdian Meta • 2 min read

Ok, back to the US elections again after the last two updates where we talked about the global economic data today and the USD/CHF forex signal

Repeating what we have already mentioned, the latest polls show Hillary Clinton clearly in the lead. In my opinion, the gap will widen a lot more after the people have cast their vote, because that´s what happened last time with Obama and Romney. Before the elections, the polls were putting them very close to one-another, but the difference after the voting closed was huge. It´s probably the way the states are divided which skews the numbers, or maybe the Republicans are much more vocal than Democrats when it comes to polls. 

Anyway, Clinton might be in front but you can never know for sure who the winner will be until the last vote is counted. We also don´t know where the Buck will end up exactly; Clinton´s advancement obviously is positive for the USD, but the question is how positive can it be?

The Buck has already advanced about a cent against all major currencies, so Clinton winning might as well be already priced in by the market and as forex traders, we can never know that. In my opinion, this is not fully priced in so there´s more room for the Buck to advance. 

That said, don´t forget about the exit polls. There will be many exit polls this afternoon (morning in the US), but most of them will be released in the evening/night European time. The states which are sided with one party won´t offer much of a surprise but the polls from the divided states can cause immense volatility. 

Ohio, Florida, Georgia and North Carolina (I might have missed 1 or 2) are the undecided states. If any of the two candidates takes these states then he/she will be the next US president. We might get the early results from these states in the evening, which will be the early results of the entire process. 

So if that´s the case, I will get long on the USD again if Hillary takes them, unless the market has outrun me by that time. Obviously, I would buy the Buck against the safe haven currencies, of which only USD/JPY is left since we have already opened signals on USD/CHF and EUR/USD

Another US election trading strategy is to fade the early exit polls. When separate polls start coming in, each one will make the USD spike higher (Hillary) or lower (Trump). But the impact of the early exit polls will be limited and the market will likely take the price back up/down until the overall trend becomes clear.

So, these spikes will offer us good opportunities to make some pips as the price retraces back to the level it was before the poll was released. It´s dangerous and I don´t know how my nerves will be by that time, but this is the nature of forex, no risk, no reward. 

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
Related Articles
0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments