Key Takeaways
- 💵 Citi views the US election as dollar positive
- 📈 Increased tariffs, especially on China, could strengthen the dollar
- 🌍 Other global economic conditions will also impact the dollar
- 🇺🇸 Different election scenarios have varying implications for the dollar
- 💼 Market participants typically start pricing in election outcomes two to three months ahead
- 💱 USD strength related to the election may be priced in well before November
- 📉 The election could lead to a "sell the news" event for the USD
Impact of the US Election on the Dollar
With the US presidential election approaching, there are various factors to consider when analyzing the impact on the value of the dollar. Citi’s view that the US election could be dollar positive is influenced by a combination of increased tariffs, global economic conditions, and different election scenarios. If tariffs, especially on China, are increased, the dollar could strengthen as a result. Furthermore, market participants are likely to start pricing in potential election outcomes months in advance, potentially leading to USD strength being priced in well before November. It’s important to note that the election itself could trigger a "sell the news" event for the USD, causing fluctuations in its value based on market reactions. Overall, the US election is expected to have a significant influence on the dollar’s performance in the coming months.