Credit Agricole CIB Research discusses the USD outlook ahead of next week's US elections.

"For some time now, FX investors have been buying risk-correlated assets and selling the USD across the board, anticipating a decisive victory for the Democrats at the upcoming November election. Indeed, this so-called ‘Blue wave’ is associated with more aggressive US fiscal stimulus but less assertive protectionism and thus seen as positive for global risk sentiment and negative for the ‘ultimate safe-haven’ USD," CACIB notes. 

"We remain of the view that the risk of a closely-fought and drawn-out US vote in November is still nonnegligible. In turn, this could still weigh on risk sentiment and boost the USD...

We think that it would only be a matter of time before the USD rebounds in tandem with the selloff in US FI markets as the markets continue to position for more fiscal stimulus in the US in the coming months and quarter," CACIB adds.