The US midterm elections will be held on Tuesday, November 8, with voting for all 435 seats in Congress and 35 of the 100 seats in the Senate. As strategists at ANZ Bank note, the US Dollar and equity markets tend to finish the month higher after midterms.

Markets appear to like a division between Congress and the president

“We regard a Republican-controlled Congress as the most likely scenario (55%). Not far behind, at 41%, is a split Congress, with a Republican-led House and a Democrat Senate.”

“The USD and equity markets tend to finish the month higher after midterms.” 

“Markets appear to like the checks and balances associated with a division between Congress and the president. This would be pertinent this time, given concerns of more policy-induced inflation pressures that would come from a Democrat-controlled Congress. On this basis, we also think the bond market would also welcome this division.”