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Mar 07 - 10:55 AM

Credit Agricole: Analyzing USD Performance Post-US Presidential Elections

By eFXdata  —  Mar 07 - 10:00 AM

Synopsis:

Credit Agricole delves into the historical performance of the USD around US presidential elections, highlighting the currency's potential movements depending on the political landscape. The analysis examines how the USD has reacted in the past to various combinations of party control in Congress and the presidency, noting that the dataset for these observations is somewhat limited. The bank also discusses the USD's general behavior in the months following presidential elections, comparing the aftermaths of the 2016 and 2020 elections to illustrate the potential range of outcomes.

Key Points:

  • Historical data suggests the USD tends to perform well when the elections result in a Republican Congress, regardless of the president's party affiliation.
  • On average, the USD has appreciated by about 2% in the months immediately following a presidential election, irrespective of the winning party.
  • The analysis contrasts the post-election performance of the USD after Donald Trump's victory in 2016 with its performance following Joe Biden's win in 2020, highlighting the variability in the currency's response to different electoral outcomes.

Conclusion:

While historical patterns suggest certain trends in the USD's performance around US presidential elections, Credit Agricole advises caution in drawing firm conclusions due to the limited scope of the dataset. The bank notes that, regardless of the election's outcome, there has been a general trend of USD appreciation in the short term following presidential votes, though the extent of this movement can vary significantly based on the specific political context and market sentiment at the time.

Source:
Crédit Agricole Research/Market Commentary

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