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In the US, results show that the ruling party has shifted from Democrat to Republican. Change does bring uncertainty, but this is not necessarily an economically harmful result.
It’s important to remember markets welcomed US President Donald Trump's 2016 win despite it marking a new political era. Frequent changes of government mean significant policy adjustments, but also opportunities.
This election will have lasting global geopolitical and economic effects, particularly around inequality, which remains a pressing issue.
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Trump's policies are likely to include a lowering of the corporate tax rate to 15 per cent, and extending the Tax Cuts and Jobs Act for personal and business income.
On foreign policy, Trump is likely to impose across-the-board tariffs on most imports. On US-China relations, securing strategic independence from China will be very much in focus alongside targeted, higher tariffs.
While Trump does have the power to pass new tariffs and immigration rules, implementing other elements of his promised policy program might be a little bit challenging if Congress is divided.
Looking to markets, the US dollar, Mexican peso, and Chinese yuan will all likely be sensitive to election results, among others. Treasury yields are also a tad bit higher.
ANZ Research expect to see a rate cut of 25 basis points this week from the US Federal Reserve. But beyond November, the Fed would likely be data dependent, given that recent figures do suggest economic resilience, and the Fed does not really need to rush into aggressive rate cuts.
Looking ahead, all eyes on the transition period in the coming weeks and months to see what happens next.
Mahjabeen Zaman is Head of FX Research at ANZ Institutional
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