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Here is Deutsche Bank's cheat-sheet listing the best currency trades for Election Night

Theo Golden   

Here is Deutsche Bank's cheat-sheet listing the best currency trades for Election Night
  • Deutsche Bank's global co-head of FX gave the best one- to two-month FX trades under different US election outcomes as concluded by the bank's currency and emerging-market research teams.
  • The note did not give suggestions for what to trade based on a Trump win with a Republican-held Senate.

George Saravelos, global co-head of FX research at Deutsche Bank, has drawn up a "cheatsheet" of what currencies to trade as the outcome of the US election unfolds, detailing which G10 and emerging-market pairings to buy or sell in the different possible election outcomes, in a note published Tuesday.

The note details "the best one- to two-month FX trades depending on the US election outcome tonight," Saravelos notes, explaining that the views represent Deutsche Bank's FX and EM research teams' "collective conclusions".

Democrat opponent Joe Biden is leading Republican Donald Trump in the national polls, although the race is a lot tighter in some key battleground states. Around 100 million Americans have already voted early in Tuesday's presidential election.

Over the last few weeks, investors have positioned more for a fairly convincing win by Biden, in which the Democrat party could retain control over the House and recapture the Senate as well. But this is just one of a number of possible outcomes, given the scope for surprise on Election Night.

Here is Deutsche's cheat-sheet for Tuesday night:

A blue-wave win

A Biden win, accompanied by a Senate majority, commonly known as a 'Blue Wave', would be the "most growth positive outcome combined with US curve steepening," the note said. This outcome would also aid risk betas in EM, but would weaken the yen "on both higher equities and yields," the note added.

Blue White House, Red Senate

If Biden wins the presidential election, but the Republicans hold the senate, the Deutsche team says would be the "least growth positive outcome," leading to very low US yields and a more dovish Fed, the note said,. There would be some relief to risk appetite without the election uncertainty, but the absence of fiscal support would remain a negative, the note added, noting that there could be some Japanification of the US.

Red White House, Blue Congress

A Trump win without a Republican held Senate is another possibility. A Trump win would allow for "some fiscal support (growth positive), but is balanced against renewed fears on global trade policy and broader policy unpredictability," the note said.

And if the result is contested?

Lastly, if the election has a contested result for over one week, this would be the "worst outcome for global risk appetite and US growth as uncertainty rises sharply," it said.

The note did not detail recommendations for a Trump win combined with a Republican-held Senate.


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