Financial markets wait for the most important event of the trading year to unfold – the U.S. elections. If the pandemic were not enough to bring uncertainty in financial markets, the American elections contribute to it as well.
For this reason, there is little or no action in the markets. For example, the stock market in America sits close to the highs posted in June-July. It just consolidates the levels until the result of the election.
The same is valid for the currency market. The EURUSD sits close to its highs in the 1.18-1.19 area, GBPUSD around 1.30, AUDUSD close to 0.7, and so on. Basically, the world watches how the battle for the White House and Congress unfolds.
Europe Likes Biden
A recent poll made in different European countries revealed unprecedented support for Democrats from the European population. In some countries, like Denmark, 80% of respondents prefer Biden, and only 6% support Trump.
Is this an anti-Trump attitude or a pro-Biden one? Out of the two, the chances are that the sentiment is anti-Trump.
Since 2016 Trump’s election, America stopped being who it was before. The world chose to wait for the last year to see if Trump will be re-elected.
Trump changed NAFTA, withdrew the U.S. from the Paris climate accord, from the Iran deal too, imposed tariffs, built a wall – to name only a few and well-known actions. Trump’s administration reversed one-hundred environmental rules from drilling and extraction to infrastructure and planning and air pollution and emissions.
For Europeans, the threat of tariffs on German cars or French wine left scars. Also, European countries were accused of not paying their fair share in NATO. Therefore, the negative view of Trump’s administration from Europe should not come as a surprise.
Perhaps the biggest upset is that America favored protectionism and isolationism under Trump, while Europe opened up like never before (that is, if we exclude Brexit). With a growing Asia and ever-influential Russia, Europe risks remaining isolated as well if the United States, the old-time partner, stops sharing common values with it.
This is what makes the current elections so important for the rest of the world. It is not about a Democrat or Republican win for America only, but for the rest of the world too.
Four more years of protectionism and isolationism in the era of a pandemic are difficult to digest in Europe. Plus, let us not forget another thing – in the second term, Presidents that got re-elected go one step further.
They have nothing to lose anymore.