The upcoming U.S. elections are expected to bring volatility to the FX markets, echoing patterns observed in previous elections. In 2016, Donald Trump's unexpected victory triggered significant dollar buying, particularly against the euro, yen, MXN, and AUD. This was partly due to the AUD's role as a proxy for trading China's currency moves. If Trump wins again, we might see a similar, although potentially less dramatic, increase in the dollar due to diminished shock value.
Conversely, a Kamala Harris victory could mirror the effects of Joe Biden's 2020 win, likely leading to a decrease in both the dollar's value and market volatility in the short term. As always, market participants should prepare for fluctuations and adjust their strategies accordingly.