Dollar Could Jump 3% Against Euro on Trump Victory, MUFG Says

The transcript discusses the potential impact of political changes, specifically a Trump or Biden victory, on financial markets. It highlights how FX markets are pricing in these political scenarios, with a focus on currency divergence and valuation models. The analysis suggests that a Biden victory could lead to a weaker dollar due to trade policy implications, while a Trump victory might strengthen the dollar and reintroduce tariff risks.

What potential political outcome is discussed in relation to market risks?

• A new trade agreement with China

• Democrats taking the Senate

• Biden's impeachment

• Trump's return as president

How does the market perceive a potential Biden presidency?

• As irrelevant to the US dollar

• As neutral for the US dollar

• As a negative for the US dollar

• As a positive for the US dollar

What is the observed divergence in the Euro-dollar spot rate?

• 2 to 3%

• 4 to 5%

• 8 to 9%

• 6 to 7%

What market change is expected with a Trump victory?

• Decrease in US dollar value

• Increase in US dollar value

• No change in US dollar value

• Stability in US dollar value

What fiscal policy change is likely with a Trump victory?

• Complete removal of fiscal stimulus

• Larger fiscal stimulus package

• Smaller fiscal stimulus package

• No change in fiscal stimulus