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Sep 17 - 02:55 PM

Credit Agricole: Trump's Impact on the USD Amid Fed Easing and Upcoming Elections

By eFXdata  —  Sep 17 - 01:30 PM

Synopsis:

Credit Agricole examines the potential implications of Donald Trump's views on the USD and tariffs as the September FOMC meeting approaches and the US presidential election nears.

Key Points:

  1. Election Dynamics:

    • While polls favor Vice President Kamala Harris, Trump remains a viable contender. His comments on the USD are significant for market sentiment.
  2. Mixed Messages on the USD:

    • Trump recently advocated for punitive tariffs against countries not using the USD, which he believes would increase its value. Contrarily, he has also praised USD depreciation for enhancing US competitiveness, creating inconsistency in his stance.
  3. Market Reaction:

    • FX investors are currently overlooking Trump’s remarks, possibly due to the upcoming Fed easing cycle. The lack of clarity in his views could lead to market uncertainty if he secures a victory.
  4. Potential Safe-Haven Demand:

    • Uncertainty surrounding Trump's economic policies, particularly regarding the USD, might drive investors toward the safe-haven dollar, especially if he wins the election.

Conclusion:

As the FOMC meeting and US presidential election approach, Credit Agricole highlights the importance of Trump's conflicting views on the USD. This uncertainty could influence market dynamics and support the USD, particularly in a climate of anticipated Fed rate cuts.

Source:
Crédit Agricole Research/Market Commentary

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