Let’s say Clinton takes the election, one could argue the opposite could be traded: Short EUR/CAD or EUR/MXN. Although I think these are good potential trades, I would also argue that the CAD/JPY and MXN/JPY could also be great longs. The CAD and MXN should outperform in that scenario and bonds (US Treasuries) should fall. Yields would rally which typically tends to be bearish JPY. Let’s take a look at those two charts:
In addition, the US Dollar is also a wildcard. I am not sure how the US Dollar will react in either scenario. My biggest question is “Will a Trump victory lead to a US Dollar selloff as investors dump US assets to include the US Dollar? Or, will the US Dollar become a safe haven at it has been in times past?” Again, I am not sure of that answer, so the only thing I can do at this point is to look at the chart in a non-bias fashion and know where it is bullish or bearish. Below is the US Dollar daily chart:
One thing is for sure for the election, the market is about to have a heightened period of volatility. In my opinion, it makes sense to keep your positions very light, so your eyes are wide open to opportunities as they arise following the election. I think it is wise, so you are not glued to some losing position you took ahead of the election which is prohibiting you from seeing the opportunities ahead.
Good luck and trade safe.