EUR/USD: Focus to switch back to Fed policy after Clinton victory - BTMU

Analysts from The Bank of Tokyo-Mitsubishi UFJ, hold a bearish perspective on the EUR/USD pair. They see it trading between 1.0800 and 1.1300 next week. 

Key Quotes: 

“The euro has strengthened against the US dollar over the last week rising back above the 1.1000-level. It has been mainly driven by a weakening of the US dollar in the run up to the US Presidential election on the 8th November. The latest opinion polls have revealed that Hillary Clinton’s lead has continued to narrow following the re-opening of the FBI probe. It has prompted the market to price in more of a political risk premium into the US dollar to reflect the higher likelihood of Donald Trump becoming President.”

“Still at the current juncture it appears likely that Hillary Clinton will become President which remains our base case scenario. A victory for Hillary Clinton would result in the US dollar rebounding in the week ahead as the focus switches back to Fed policy.”

“We expect the release of the non-farm payrolls report for October to support the Fed’s plans to resume rate hikes in December. In contrast, a shock victory for Donald Trump could trigger a sharp US dollar sell off potentially delaying the resumption of Fed rate hikes.”