US Election Ramifications for The US Dollar!

US Dollar Outlook Amidst Upcoming Presidential Election: Trump vs. Kamala Harris

With the U.S. elections approaching, the impact on the U.S. dollar remains a significant concern for traders and economists. The election, scheduled for November 5th, will either see former President Donald Trump returning to office or Vice President Kamala Harris assuming the presidency. Both candidates represent starkly different economic strategies, and their potential victories are expected to influence the strength of the U.S. dollar in varying ways.

Donald Trump is known for his pro-business policies, which previously stimulated domestic growth. If re-elected, Trump is expected to push for tax cuts and deregulation, fostering a business-friendly environment. This would incentivise both domestic and foreign investors, likely boosting the U.S. dollar. His focus on domestic manufacturing through the "America First" agenda seeks to reduce reliance on imports and enhance U.S. production. Historically, such policies have been beneficial for the U.S. dollar, as they drive investor confidence and support currency strength.

Additionally, Trump's past trade negotiations often involved protectionist measures and tariffs, which could further solidify the dollar’s position. Financial markets tend to favour the predictability and stability that Trump's economic policies bring, contributing to a positive outlook for the U.S. dollar if he wins.

Kamala Harris's Progressive Approach and USD Implications

On the other hand, Kamala Harris, as part of the Biden administration, champions progressive policies. These include a focus on social equity, environmental sustainability, and expanded government programs like healthcare reform and green energy initiatives. While these policies aim to address long-term issues such as income inequality and environmental concerns, they may not generate the immediate investor confidence required to strengthen the U.S. dollar.

Harris’s policies could potentially lead to increased government spending without the direct pro-business benefits seen under Trump, which may result in a weaker U.S. dollar. Markets may perceive her economic agenda as less favourable in the short term, especially when compared to Trump’s business-centric policies.

The Federal Open Market Committee (FOMC) meeting on November 7th, just days after the election, will further influence the dollar’s trajectory, adding another layer of complexity to the currency’s future.

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