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    Trump vs Clinton uncertainty to support Yen also - MUFGSandeep Kanihama

    Derek Halpenny, European Head of GMR at MUFG, suggests that one of the factors that is set to come into increasing focus for the Yen will be the presidential elections in the US on 8th November.Key Quotes“With the UK-EU referendum approaching this topic is not yet getting the full attention of the markets but if the UK votes to ‘Remain’, we would expect much greater attention to be given to the potential political uncertainty as the Republican and Democrat conventions approach in July. Victories for Hillary Clinton in New Jersey and New Mexico primaries yesterday effectively confirmed her nomination with Bernie Sanders scheduled to meet with President Obama on Thursday, perhaps to concede defeat.We will of course begin to cover this issue in more detail going forward from here – but for the record at this stage, our current FX forecasts assume a Hillary Clinton victory. We find it extremely difficult to arrive at a scenario giving Trump the White House. Just to highlight this, Trump again has made trouble for himself by criticising a Latino judge in comments that were described as racist. Speaker Paul Ryan described the comments as racist and one Republican Senator rescinded his support for Trump. Just to illustrate the potential damage events like this cause, the BBC highlighted the fact that in 2012 Mitt Romney won 27% of the Hispanic vote and if Trump was to match that (unlikely perhaps), he would still need to win 64% of the white vote in order to win the election. No Republican has done that since Ronald Reagan’s landslide in 1984!But no matter how confident one might be on the outcome that doesn’t mean we should ignore it. We pointed out recently that the dollar is generally trading weaker than implied by rate spreads and we wonder if the US election is beginning to have an influence. In that regard we read with interest the results of a quarterly Duke University/CFO Business Outlook survey that revealed nearly half of respondents were slashing hiring and business investment plans due to political uncertainty ahead of the election. 80% of CFOs stated that the US faced “moderate-to-large” political risk while 40% believed foreign companies were less willing to conduct business in the US due to the political climate.”


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