The Clinton win offers poor risk reward by now

It looks as though a Clinton win has been heavily discounted by now, if one judges by the levels of key risk assets such as the SP 500 (+0.31%), gold (-0.23%) and US 30-year Treasury yields (+0.58%), which implies that if Clinton is confirmed as the winner of today's US presidential election, the response by market participants may be fairly modest.

What if Trump does well? That's where the risk reward is

However, a Trump upset, not necessarily a confirmed win but just the fact that he is doing well in key states, would cause major upheaval, with markets turning full 'risk-off' mode; as a result, the Japanese Yen, Euro and Swiss Franc should be the main beneficiaries. It would not be that surprising to see USD/JPY visit levels close to 100.00 or EUR/USD fly towards 1.14/1/15.

The moves would be comparable to those swings seen in early Brexit day, when we learnt about the Sunderland blow for the pro-Remain campaign, which woudl imply volatility of about 5 to 7 times the ATR (excluding yen pairs, where volatility may pick up even further).

Clinton win faces 'buy rumour, sell fact' trade, Trump win means chaos

In conclussion, a Clinton win faces the prospects of a 'buy the rumours, sell the fact' shortly after her presidency is confirmed. If playing long risk, traders shold probably be quick to take profits as the smart money may use the confirmation to get out and cash in the profits. On the other hand, an early good performance by Trump would open a can of worms (read volatility), with traders then having to adapt to each and every state result; if that's the case, anything can happen and the name of the game would be to trade based on a minute-by-minute 'sentiment' basis.