Title: Trump vs Harris Debate Fallout: Market Analysis and Impact on USD Gains
Donald Trump and Kamala Harris engaged in a heated debate covering key issues such as abortion rights, immigration policy, and the economy, lasting over 90 minutes. Despite not resulting in a clear ‘knock out’ win, Harris seemed to have garnered more points, with a CNN poll showing 63% of voters believing she won. ING’s FX strategist Francesco Pesole observed this trend in the market.
Implications for FX Market:
A Trump victory typically strengthens the dollar, but currently, the dollar is trading weakly against other currencies. Asian currencies are performing well, indicating a scaling back of Trump-related trades. Harris’s stance against universal tax plans while maintaining pressure on China may be influencing this trend. Additionally, CEE currencies and high-beta NOK are showing moderate strength, possibly due to reduced geopolitical risks under a Harris administration.
Market Forecast:
The fallout from the debate, coupled with the upcoming August inflation report, may impact market dynamics. There is a slight tilt towards a stronger dollar, as a consensus figure in the report could lead to expectations of a rate cut. However, a lower perceived chance of a Trump win may limit USD gains. Unless there is a significant CPI surprise, the DXY index may struggle to reach 102.0 before the FOMC meeting.
Analysis and Conclusion:
The Trump vs Harris debate has influenced market sentiments, particularly in the FX market. Harris’s performance has led to a weakening of the dollar and a shift in currency trends. Investors are closely watching the upcoming inflation report for further insights. The outcome of the debate and economic indicators may impact the USD’s strength in the coming weeks. Stay informed and monitor market developments for potential investment opportunities.