Citi Strategists Reiterate USD Positive View for U.S. Election Impact
In a recent report, Citi strategists reaffirmed their belief that the upcoming U.S. election will have a positive impact on the U.S. dollar. They emphasized that trade and tariff policies, especially those targeting China, are expected to drive a bullish outlook for the USD.
The report outlined various election scenarios, with a "red wave" scenario, where Trump wins and Republicans gain control of both chambers of Congress, seen as the most USD positive. However, they also noted that other factors such as Federal Reserve policy, recession risks, and global economic conditions could influence the dollar's performance.
Market participants are expected to start pricing in election outcomes more seriously in the months leading up to the event, with the U.S. presidential debates in September serving as a key point for this. Citi strategists predict that any USD strength related to the election will likely be priced in well before November, potentially reaching its peak around that time.
In conclusion, the U.S. election is expected to be a significant market event with implications for the USD and volatility. Investors should keep an eye on not just election-related factors, but also broader macroeconomic conditions and global economic developments to make informed decisions about their finances.