In a note out this past week, Citi's FX team called a disputed election the 'biggest political risk' in the world.
They wrote:
We view most of the recent price action in G10 FX (with the possible exception of the USDJPY rally) as being the result of squaring up ahead of the US election and 18th National Congress of the Communist Party of China. The biggest political risk is the potential that the US result won't be known due to the combination of a tight election and re-count/mail-in issues in swing states.
They cited the possibility of a nail-biter in Ohio that doesn't get resolved for days, as mail-in ballots take a long time to get counted.
Now more and more people are talking about this possibility.
AFP has a great summary of the issue:
The problem this year is that there could easily be that many provisional ballots cast in Ohio, where state law prohibits officials from starting to count them until 10 days after the election.
About 200,000 of the more than 1.3 million absentee ballots mailed have not yet been returned, the Ohio secretary of state's office said Saturday.
...
In an effort to avoid the mess of 2004 -- when thousands of voters waited hours in the cold to cast their ballots -- Ohio election officials sent absentee ballot applications to every registered voter in the state.
The aim was to cut down on lines and make it as easy as possible for people to vote: they can pop the early ballot in the mail, drop it in a box at a polling station or just walk into a polling station and request an early ballot.
But if someone applies for an absentee ballot and then decides to vote on election day -- and experts think plenty of people will -- then they will be required to cast provisional ballots that are sealed in an envelope until it can be proven they haven't already voted.
With the latest poll in Ohio showing the margin to be razor thin, this is a real issue for the country and markets.
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