The outcome of the 2020 US Presidential election is unlikely to alter the fate of the US dollar index, which is down 9% from its March highs, the latest Reuters poll of investors and analysts showed.
Key findings
“Many market participants believe that a victory by Joe Biden – currently the front-runner in polls – and a potential Democratic sweep would likely weigh on the U.S. currency further, as the former vice president is expected to open the door to policies that investors view as dollar-negative, including robust fiscal stimulus.”
“Four more years of a Donald Trump presidency may offer a less-clear path for the dollar. Although a continuation of Trump’s belligerent approach toward China would likely boost the dollar’s allure as a haven asset, those gains may be outweighed by factors such as continued negative US real yields.“
“While that short position reflects the negative sentiment swirling around the dollar, it could also fuel gains if a change in the narrative forced investors to unwind those bets all at once. The uncertainty surrounding a contested election could be one such event.”
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