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Which way for the dollar after the US election? USD/JPY front and centre

The markets are trying to make sense of how the dollar will react on the outcome of the US election. The general feeling is that a Trump win be inflationary and will push US yields higher and hamper the Fed in lowering monetary policy further. It should be noted right here and now; that the current market consensus on Thursday is almost 100% skewed towards a 0.25% Fed rate cut. Well, if Trump reclaims the White House, that would not seem to add up, would it? So, are we therefore to conclude that it will be Harris who wins the race? Given the reaction in the dollar so far today you can see how the odds of her being successful would appear to have immediately lifted and pushed the dollar lower, right? The prospect for Harris to win would infer a corporate tax hike from 21%, to 28% and that is not good for stocks we assume and not good for the dollar either, as such a move would tend to infer significant rate cuts from the Fed. So there you have it folks- Harris wins, dollar falls and if Tump wins, the dollar rises. Is that too simplistic perhaps? Well, of course, but that seems to be how the markets are viewing the prognosis right now. As usual US yields will be the driver for most likely currency pair to win or lose on all this and that is the USD/JPY folks. The USD/JPY is tracking lower again right now as this update is concluded, trading at 151.82
 

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