Trump’s nationalistic rhetoric has sent chills through many markets. Fear of trade wars focused on China and Mexico have caused Selling in the Peso and Oil as Trump popularity rises and renewed Buying as Trump fades. Markets fear uncertainty and while Trump supporters are far more enthusiastic than Hillary’s, his “burn it down” campaign style continues to affect financial markets adversely.
It was no coincidence that the Peso had its biggest one day gain in months the day after Hillary won the first Presidential debate 9-27-16.
While Oil is buffeted by many reports affecting supply and demand, it’s apparent that Trump’s populist appeal can scare the energy sector. OPEC’s announcement this week of production caps coming and Hillary’s debate victory have put a new higher floor under Oil prices in the mid-40’s. Any new Trump surge in popularity may only bring Oil back to $45 to 46 and an actual Trump victory November 8th could send Oil close to $40 in November. Otherwise we can expect oil to remain above the mid-40’s with resistance in the $48 to $50 window until the post OPEC meeting fallout in December.
Until November 8th we should generally expect Oil and the Peso to continue their inverse correlation with the fortunes of the Trump campaign. With 2 more debates, October 9th and 19th, followed by a major Wikileaks reveal and a final 19 day blitz of TV ads, there is strong potential for more market volatility into November.