According to Morgan Stanley analysts, although the Republican Party aims to offset the strength of the US dollar, the possibility of winning the election later this year will boost the dollar.
According to the Intelligence Finance app, Morgan Stanley analysts said that although the Republican Party aims to counter the strength of the US dollar, the likelihood of the Republican Party winning the election later this year will boost the dollar.
Strategists including Andrew Watrous and Zoe Strauss wrote in a research report on August 6th that "Although former President Trump opposes the strong dollar, we believe his policies will lead to a strong dollar." They pointed out that major dollar indexes soared in November and December 2016 after Trump's last victory. They added," If the Republican Party wins a big victory, expansionary fiscal policy agendas may boost people's expectations of US economic growth and encourage capital inflows into the United States."
"Higher tariffs imposed by the United States on other regions of the world may result in foreign authorities allowing their own currencies to depreciate or putting pressure on overseas economic activities, making the United States look more attractive in comparison. "
The US dollar index has risen by 1.6% so far this year, but traders have increased their bets that the Federal Reserve may have to be more aggressive in cutting interest rates as the US economy shows signs of slowing down.
In contrast, Morgan Stanley believes that if the Democratic Party returns to power, the US dollar will be at a disadvantage. Analysts said:" If the Democratic Party continues to control the White House, the weakening of the main risks faced by economic growth, especially those related to trade and geopolitics, may reduce the demand for safe-haven currencies, including the US dollar."
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