US: Donald Trump facing an even harder task to become President - MUFG

Lee Hardman, Currency Analyst at MUFG, notes that the foreign exchange market has remained relatively stable in the Asian trading session having been impacted only modestly by yesterday’s second Presidential debate.

Key Quotes

“The consensus opinion in the financial press is that Donald Trump performed better than in the first debate but that may still not prove enough to turn around his campaign to become President following a weekend of “unprecedented crisis” which included a number of top Republicans withdrawing their support. Donald Trump is facing an even greater challenge to convince the public that he has the character and fitness to become President.

Even after a better performance in the second debate from Donald Trump, two snap polls still showed that respondents believed that Hillary Clinton had won the second debate. A CNN/ORC poll revealed that 57% of respondents believed that Hillary Clinton had won the debate compared to 34% for Donald Trump. A YouGov poll also revealed that respondents believed that Hillary Clinton had won the debate but by a narrower margin of 47% to 42%.               

The weekend’s developments have prompted the market to discount an even smaller probability of Donald Trump becoming President. It has resulted in the Mexican peso rebounding further overnight and encouraged Asian currencies to trade on a firmer footing both of which are sensitive to the risk of trade disputes under a Trump Presidency. Elsewhere, the US dollar has strengthened modestly against the other major currencies although the reaction is more limited as the risk of Donald Trump becoming President was already perceived as relatively low.”