Because the November 5 US presidential election approaches, Credit score Agricole analyzes the potential impacts on the US greenback, noting bettering odds for a Donald Trump victory and the next market reactions.
Key Factors:
- The rising probability of a Donald Trump win has led to renewed curiosity in “Trump trades,” contributing to a rally within the USD.
- The important thing concerns for FX traders are the extent of the potential USD positive aspects from a Trump victory versus the attainable draw back if Kamala Harris wins.
- Regardless of the continuing uncertainty surrounding the election final result, FX Positioning information signifies that traders are usually not closely lengthy on the USD.
- Latest USD positive aspects are partially attributed to a reassessment of the market’s dovish Federal Reserve outlook, spurred by constructive US financial information surprises.
- International corporates seem to have accomplished their FX hedging packages for the yr, lowering the everyday year-end USD-selling stress.
- A Trump victory, together with a Republican majority in Congress, might result in a stronger USD as extra traders might interact in “Trump trades,” whereas subdued company promoting might help the forex.
- A Harris victory is unlikely to set off a major USD sell-off, in distinction to the decline seen after Joe Biden’s win in 2020, as a result of USD’s enduring fee benefit and the resilience of the US economic system.
Conclusion:
Credit score Agricole means that the USD might expertise important upward momentum if Trump secures the presidency, whereas the impression of a Harris victory would probably be muted, reinforcing the USD’s robust positioning within the present market context.
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