In a stunning turn of events, the President of the United States (POTUS) and the First Lady (FLOTUS) tested positive for COVID-19. The announcement was made on Donald Trump’s official Twitter account and sent a shiver across the financial markets.
Futures in the United States are down, the USD is up, the JPY and the CHF are also up – a pure risk-off move, caused by uncertainty. This is the kind of uncertainty that was supposed to be expected in the case Trump won – what is good for Trump is good for the USD.
Only this time, this news is a game-changer. What happens to the election process if one of the candidates gets sick? What happens to the election day if one of the candidates must quarantine and cannot actively pursue his campaign?
The USD Flexes Muscles
Today is the NFP day, and the volatility was expected to be elevated. But this news raises the game to a whole different level. Before looking at some scenarios, we wish both Trumps a speedy recovery.
One of the first things that come to mind is the message the news sends – that no one is truly protected. And that the disease does not discriminate, no matter what you do.
Sure, the POTUS has contact with numerous people, especially during an election process. But POTUS also has access to the best prevention and test method, like the 15-minutes tests for COVID-19. In any case, the news shows that in this battle, we are all the same. However, more importantly, for an election point of view, the news humanizes Trump.
Second, Trump hinted many times before the election process started that the elections would be postponed. I am sure that this is not what he had in mind, but one cannot stop thinking and connecting the previous statements with what is happening now. What is the next step – postponing elections? What are the official steps in case one of the candidates cannot run its campaign fairly?
Finally, this is a shock on all levels. As such, the USD flexes its muscles as investors look for safe-haven. Moving forward towards the North American session and the end of the trading week, the chances are that many investors will try to get some “chips” off the table. Be it selling stocks, selling Euros, AUDs, or GBPs – in a risk-off move, all that matters is to get out and get out fast.