The USD has been firmly on the back foot really since late March, however, intensifying over the past few weeks.
There is an added weight on the Dollar’s shoulders, with a new theme that is very much likely to soon start dominating the market, U.S. Presidential elections in November.
Early polls have already started to hit the newswires, some are showing that Trump’s standing among voters has eroded, with the criticism over his handling of the coronavirus pandemic, in addition to the protests sparked by the killing of George Floyd in police custody.
Trump is seen as a more stock and Dollar positive outcome, as seen in the last election, given his very pro-business/stocks stance.
Over June 8-9 an Ipsos poll was conducted June showing Democrat Joe Biden, the former vice president, led Trump, by 8 percentage points among registered voters. The poll additionally found that 39% of the American public approves of the president’s performance in office, while 57% disapproves.
What does this mean for the market?
Dollar, as mentioned, has already been selling off over the past few months, largely due to the increased dovish efforts by the FOMC. Markets have also been very much risk-on, traders/investors seeking the riskier assets, that has left the safe-havens out of favour. Heading closer towards the election should further polls continue to show Trump is losing ground, then this will be another reason to keep USD largely at bay. In terms of U.S. stock indices, at some point, this could also start creating a bear market.
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