Summary
The coin has been tossed, and now we are all waiting to see which side it will land on. The question is how will the greenback (NYSEARCA:UUP) react to a Trump or a Clinton victory? Contrary to what many believe, if Trump wins the presidential vote then the US dollar will most certainly reign supreme, after its initial knee-jerk correction. On the other hand, if Hillary wins then the dollar's behavior will be bumpy. These completely opposite reactions of the greenback to the election outcome are due to what the candidates have promised to bring the world. Trumps' trade war, if taken at face value, coupled with its back-loaded economic plan, would bring a big deflationary shock to the global economy, benefiting the greenback. Clinton's front-loaded stimulus plan and openness to international trade will contribute to the Asian business cycle acceleration and will bring more inflation back home, eventually pressuring the dollar. If Trump wins, then the US dollar index would ultimately surpass the 100 level, exhibiting a strong bullish trend, after its initial knee-jerk sell-off. This would make the dollar move in a J-like trajectory. If, on the other hand, Hillary wins then the US dollar index will react straight up, at first, before correcting towards its long-standing sideways zone down the line. While we still are unsure of the election outcome, we can be certain that the US dollar will experience intense volatility no matter who wins.
- The USD sold-off in reaction to the recent tightening of the presidential race.
- In case of a Trump victory, the US dollar could ultimately benefit the most, after its initial knee-jerk correction.
- If Clinton wins any initial dollar gains could prove to be short-lived.
The coin has been tossed, and now we are all waiting to see which side it will land on. The question is how will the greenback (NYSEARCA:UUP) react to a Trump or a Clinton victory? Contrary to what many believe, if Trump wins the presidential vote then the US dollar will most certainly reign supreme, after its initial knee-jerk correction. On the other hand, if Hillary wins then the dollar's behavior will be bumpy. These completely opposite reactions of the greenback to the election outcome are due to what the candidates have promised to bring the world. Trumps' trade war, if taken at face value, coupled with its back-loaded economic plan, would bring a big deflationary shock to the global economy, benefiting the greenback. Clinton's front-loaded stimulus plan and openness to international trade will contribute to the Asian business cycle acceleration and will bring more inflation back home, eventually pressuring the dollar. If Trump wins, then the US dollar index would ultimately surpass the 100 level, exhibiting a strong bullish trend, after its initial knee-jerk sell-off. This would make the dollar move in a J-like trajectory. If, on the other hand, Hillary wins then the US dollar index will react straight up, at first, before correcting towards its long-standing sideways zone down the line. While we still are unsure of the election outcome, we can be certain that the US dollar will experience intense volatility no matter who wins.
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