Synopsis:

Credit Agricole anticipates an asymmetric impact on the USD from today’s US elections, with the USD positioned for a temporary dip if Kamala Harris wins and a potential revisit to recent highs if Trump prevails. Strong US economic fundamentals and a favorable rate differential support the dollar's resilience in either scenario.

Key Points:

• USD Positioning: Recent USD strength has seen heavy long positioning, which has begun unwinding as polls show weaker support for Trump.
• Asymmetric Impact: A Trump victory is expected to push the USD back to its highs for the year, while a Harris win could drive the USD closer to September lows, though without sustaining a downward trend.
• Underlying Support: The USD’s strong economic backing and rate advantage over other currencies suggest that any election-driven USD weakness will likely be short-lived.

Conclusion:

Credit Agricole expects the USD to react asymmetrically to the election outcome, with the potential for a Trump win to lift the USD back to yearly highs, while a Harris win may lead to a temporary pullback without establishing a lasting downtrend. The USD remains supported by robust fundamentals and a significant rate advantage.