Obama Stays in the White House, but How Will the Markets React?

Business & Finance

LONDON–(Marketwire – November 7, 2012) – Barack Obama has been re-elected as the US President for a second term after a closely fought evening at the polls, narrowly pushing out Republican candidate Mitt Romney.

Investors and spread bettors will now be looking to capitalise on price movements within the financial markets, but can they be sure which way the tide will turn over the next few weeks?

How to Trade Forex following Obama Win

The US dollar immediately fell back in trading on Wednesday 7th November as investors digested the Obama victory as indicating a continuation of the Fed’s easing policy, which has proved to be a negative for the US dollar. As the day progressed, the US dollar then started to recover.

If you believe the US dollar will now fall in value, you could open a long position or ‘buy’ the AUD/USD currency pair, ensuring that for every pip the price moves above your entry point you would stand to make a profit.

However, if the US dollar strengthens against the Australian dollar, pushing prices below your entry point as a result, you would stand to net losses that could potentially exceed your initial deposit.

How to Trade Commodities following Obama Win

Ashraf Laidi, Chief Global Strategist at City Index, stated this week that “The least ambiguous scenario analysis from the US Presidential elections is that a Romney victory would be deemed a negative for gold,” due to the Republican candidate’s foreign policy with regard to China and lack of support for the Fed Chairman Ben Bernanke and his proactive stance on monetary easing.

If you opened a long position on gold, you’d stand to make money for every point the commodity rose in value above your entry point.

If gold prices weakened below your entry point despite the outcome of the US election, you’d stand to make a loss.

If you choose to trade the markets following the re-election of President Obama, ensure you only invest what you can afford to lose and use stop loss orders.

Spread betting, CFDs and forex trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

About City Index:

City Index provides access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

Joshua Raymond
City Index