Stocks & Dollar: What to expect with Joe Biden’s victory?

Joe Biden’s victory in the US election is positive news for the stock market around the world. In terms of the US Dollar, it is expected to devaluate somewhat against the major global currencies.

According to experts, Biden’s victory represents less uncertainty on the economy’s radar, which helps to reduce the fear of investing. This stimulates higher return products, such as stocks, and reduces the demand for assets considered strategic reserves, such as gold and dollar.

The American elections have been a source of stress for some time. With a definition, investors can begin to outline scenarios because they know at least the line of policies of who will run the world’s largest economy in the coming years.

Why Biden’s victory benefits the stock market?

Stimulus package: Democrats and Republicans must finally reach agreement on the approval of the stimulus package in response to the pandemic crisis. The injection of up to US $ 1 trillion will help the largest economy on the planet gain strength and pull the rest of the world’s economic activity.

Global trade: Biden is expected to resume the trade deal agenda by taking a less confrontational stance with historic Americans’ partners. This policy is seen as positive by the markets because it can stimulate global trade and, consequently, the world economy.

Balance of forces: The Republican party can still maintain a majority in Senate. This eventual balance of forces is considered a positive factor for the markets because themes that are more sensitive to entrepreneurs can be stopped.

What is the impact on the exchange rate?

The definition of who will lead the United States removes a source of uncertainty from the horizon. This alone can reduce the demand for the dollar as an application and devalue the American currency in relation to most currencies in the world.

In addition, Biden advocates more government spending on social policies, such as health care, as well as raising taxes, to cover extra expenses, measures that can discourage the search for the dollar. In this scenario, the market works with the dollar losing some of the value it has accumulated this year against most other currencies.