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A U.S. dollar upside is the “probably the most reliable consequence” of the upcoming U.S. presidential election, as markets predictions lead towards a Trump victory.
In a Goldman Sachs Economic Research note, Analyst Dominic Wilson wrote that the U.S. dollar (DXY) still remains attractive due to the upcoming elections.
“For those protecting equity portfolios from the two main risk scenarios (a negative reaction to tariff proposals and a potential for a larger upward move in yields), we think more direct hedges — VIX (VIX) upside and U.S. equity (SP500), (DJI), (COMP:IND) downside — are likely the best options,” said Wilson.
He also said that gold (GLD), (XAUUSD:CUR) is also looking good despite geopolitics and potential changes in the Federal Reserve’s leadership.
“Although traditionally markets have often reacted to the U.S. election only 1-2 months ahead of the event, we have also seen meaningful shifts in election probabilities — and markets — around presidential debates,” he added. “The much earlier debate calendar increases the chances that the market impact appears earlier than usual, creating a case for setting some election hedges already.”
The first presidential debate will take place this Thursday in Atlanta and will be moderated by CNN’s Jake Tapper and Dana Bash.