Credit Agricole Research discusses the possible impact of the US elections season on the USD.
"The ‘US summer of discontent’ could add to the political uncertainty ahead of the 3 November presidential election and thus affect the outlook for the USD across the board, in our view. Indeed, President Donald Trump is already lagging behind Senator Joe Biden in national polls and all battleground states, and the Democrats could be in a position to wrestle control of Congress from the GOP," CACIB notes.
"Our analysis further shows that the USD has tended to underperform in years when the incumbent president was fighting for re-election, and the losses were more pronounced when the incumbent was heading for defeat. Market concerns that such a scenario may materialise could lead to renewed USD losses in the coming months and boost USD vol. In our FX forecasts we therefore expect the USD to continue to struggle vs the EUR and even the GBP in H220," CACIB adds.