Dollar on the backfoot with focus on the US election tomorrow

The snapshot of the dollar pairs above shows the greenback down across the board, after opening with a gap lower. Ignore the high for USD/JPY there as that is likely an error on the sheet. My chart has it at 152.54 and that’s the one I’m following. In any case, the dollar is down as Harris’ odds of winning sees a turnaround since the weekend. Over the last few months, the dollar has been – coincidentally or not – tracking very closely the odds of Trump winning:

So, the reverse of that is seeing the dollar dragged lower to start the week. This comes with some polls starting to show a more neck and neck race and a potential upset by Harris in the state of Iowa. I still hold my reservations on the latter though but you can’t ignore how sentiment can easily shift on weeks like these.

As for a close race, let’s just say that pollsters tend to get things wrong more often than not. And it’s best to be reminded of that.

The working theory now is that if the polls are wrong, there’s going to be a clear cut winner. That comes as the polls are perhaps underestimating Trump as they have done in the past or understating Harris’ underlying support, especially in the swing states.

Either way, if the polls are wrong, we should get an idea of who will win rather quickly this time around. If the polls get it right and it is indeed a much closer race, then expect the result headlines to keep markets on edge at least for another 24-48 hours. Oh, what fun.

This article was written by Justin Low at www.forexlive.com.