USD: Caution Warranted; Nonnegligible Risk Of A Closely-Fought And Drawn-Out US Vote – Credit Agricole

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The US election is less than a week away. What is the outlook for the US dollar?

Here is their view, courtesy of eFXdata:

Credit Agricole CIB Research discusses the USD outlook ahead of next week’s US elections.

“For some time now, FX investors have been buying risk-correlated assets and selling the USD across the board, anticipating a decisive victory for the Democrats at the upcoming November election. Indeed, this so-called ‘Blue wave’ is associated with more aggressive US fiscal stimulus but less assertive protectionism and thus seen as positive for global risk sentiment and negative for the ‘ultimate safe-haven’ USD,” CACIB notes.

We remain of the view that the risk of a closely-fought and drawn-out US vote in November is still nonnegligibleIn turn, this could still weigh on risk sentiment and boost the USD...

We think that it would only be a matter of time before the USD rebounds in tandem with the selloff in US FI markets as the markets continue to position for more fiscal stimulus in the US in the coming months and quarter,” CACIB adds.

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Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.