Trump Projected to Win Nevada, Minnesota in the Balance, AUD to Rise on Biden Win

Joaquin Monfort | October 06, 2020

In this update, the election monitor shows Biden still in the lead despite Nevada now forecast to fall to Trump; the swing state of Minnesota is in the balance; the monitor and the televised debate; and how the Australian Dollar is tipped to rise in the event of a Biden victory.

Key takeaways

  • Trump takes the lead in Nevada
  • Race in Minnesota closer than ever
  • The televised debate’s impact
  • AUD to rise if Biden wins

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This week, our 2020 Election monitor landscape changes again, from previously showing a 319 to 219 electoral college vote lead for Joe Biden, it is now showing a slightly reduced lead of 313 to 225 electoral votes.

The 6-vote change has come about as a result of the monitor changing the forecast for who it expects to win in the state of Nevada, from Biden to Trump.

trump projected to win in nevada

The headline figures are optimum projections from ranges of between 277 - 352 for Biden, and 186 - 261 for Trump, yet even if Biden only secured the lowest number of votes in the range and Trump the highest, Biden would still win the presidency with a majority of 277 to 261.

Time will tell if Trump can remain in the lead in Nevada, for if ever a state deserved to be called marginal it is Nevada, having voted Democrat in 19 of the last 39 Presidential elections and Republican on the same number of occasions.

In 2016 Nevada fell to Trump but in the 2 elections before - in 2012 and 2008 - it fell to Obama.


Minnesota is considered a key marginal state which could decide the outcome of the election. Previously the monitor had been showing Joe Biden in a commanding lead, but that lead has shrunk from 95% likely to win on October 1 to 63.5% on October 5.

Trump’s probabilities have, meanwhile, increased from 5% to 36.5%.

The rise in Trump’s chances of winning suggests Minnesota may be back on the cards as a state where Trump could sneak a win, and that it deserves a place on analysts’ watchlists.

minnesota increasingly marginal


The Trump vs Biden televised debate was one of the highlights of the election coverage last week. Whilst Trump was the more aggressive interlocutor, Biden came across as arguably the more statesmanlike, holding his cool despite the flak.

A cursory look at the monitor on the day after the debate showed absolutely no change in the headline figure, suggesting little impact on voters, but what it did show was a +22.8% rise in the probabilities of Trump winning in the state of Arizona (see below), a very large 1-day swing - presumably brought about by a positive perception of Trump’s performance.

impact of televised debate arizona


With Biden still, hand’s down, projected to win, market analysts are looking at how such an outcome will impact on financial markets.

Much has been said of how different stocks may rise or fall on the news of a Biden victory, but little about the impact on foreign exchange markets.

According to comments from a strategist at Nordea bank, however, a Biden win will probably see the Australian Dollar rise, as it is the G10 currency most sensitive to global trade.

“The Aussie is a good buy if Biden wins the election.” Says FX Strategist, Andreas Steno Larsen in an interview with Bloomberg News. “I look at the sensitivity within G10 currencies to a Biden victory and the Aussie is probably a good bet in such a case - you know how the Aussie is correlated to how EM performs, and commodities..”

Larsen is of the view that a Biden win will lead to better relations between the U.S. and China, and that coupled with the probable discovery of a COVID-19 vaccine in early 2021 will usher in a renaissance in global trade.

Another reason to expect the Aussie to rise is that it is substantially undervalued according to the Purchasing Power Parity (PPP), a valuation metric based on the exchange rate calculated by comparing the cost of two exact same baskets of goods in 2 different currencies.

One simple but popular measure of PPP called the Big Mac Index - as it compares the cost of the famous burger in 2 countries to arrive at the valuation rate - assess the Australian dollar as 19.8% undervalued compared to the U.S. Dollar; the inference is that the Aussie will strengthen as it drifts back up to parity.

australian dollar big mac

FX was the subject of our latest white paper in which RavenPack data scientists compared returns using traditional trading strategies based on Value (using PPP), Carry, and Momentum, with the same strategies enhanced by a news sentiment overlay. It found returns increased by 3x as a result of the sentiment overlay.

As far as AUD/USD goes, the pair is also likely to get a backdraft from the U.S. Dollar weakening in Q4, says Nordea’s Larsen.

This is due to a probable increase in Dollar liquidity, due, to banks experiencing a Dollar glut because of new rules preventing them from spending their capital on share-buybacks.

Further liquidity could come about if Democrats and Republicans cannot agree on a new stimulus plan. The Fed already has the money to finance the stimulus in its Treasury General Account but if no additional stimulus is agreed it will feed the money into the commercial banking sector instead.

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