The White House and the Dollar

Investment Rating - The report suggests a positive correlation between a potential Republican administration and the strength of the US dollar, indicating a favorable investment outlook for USD-related assets [1][3][14]. Core Insights - The expectation is that the US dollar would strengthen if the Republican Party is perceived to have a higher chance of winning the presidency, reflecting historical trends from the 2016 election [3][5]. - Policies proposed by the Republican campaign, such as higher tariffs, could lead to a depreciation of foreign currencies, making US assets more attractive [1][3]. - Rising geopolitical uncertainty may drive investors towards US assets as a safe haven, further supporting the dollar [1][3]. Summary by Sections Economic Policy Uncertainty - Elevated trade policy uncertainty under a Republican presidency may support the US dollar, while regulatory and fiscal policy uncertainty under a Democratic administration may act as headwinds [15][34]. - The report discusses how various policy areas, including fiscal and trade policies, impact market expectations for US growth and the outlook for US financial assets [15][16]. Trade Policy and USD - Trade policy is identified as a central avenue through which the 2024 US election may influence exchange rates, with historical data showing that trade policy uncertainty has been associated with USD strength [36][37]. - The report highlights that US tariffs could negatively impact US growth expectations but may also lead to a stronger dollar if they result in reduced foreign competition [40][42]. Geopolitical Implications - Anticipation of renewed trade confrontations under a Republican administration may introduce a positive risk premium into the US dollar due to geopolitical considerations [65][66]. - The report notes that geopolitical risks are increasingly cited by firms as significant challenges, which may further bolster demand for the dollar as a safe haven [66].