FX vol markets shrug off US election fears

Vols are trading below their pre-election levels despite uncertainty over result

US-presidential-election-2020

FX options traders spent much of the lead-up to the US presidential election worrying about what could play out if the result was delayed or disputed. As it turned out, the market reaction was remarkably calm, both on the day of the vote and the next. The FX options head at one European bank describes it as “the lull before the lull”.

While trading was quiet going into the election, volatilities were nevertheless elevated. The expectation was that they would fall as the election result became

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