USD: Guided by the elections outcome - ING

In view of analysts at ING, Tuesday’s US mid-term elections will have a major say over where the dollar trades for the rest of the year.

Key Quotes

“Long dollar/short EM positioning is vulnerable going into this election risk given that in the background we now have the (albeit small) prospect of Presidents Trump and Xi striking a trade deal later in November. But the dollar hasn’t rallied this year purely on trade friction.”

“The fiscal/monetary mix has had a big say in the dollar, and that’s why mid-terms are important. Pollsters expect the House to go to the Democrats, which reduce chances of fresh stimulus, raise chances of debt ceiling grid-lock and probably be slightly dollar negative.”

“A Red Wave of a Republican hold in Congress is unexpected and would probably be dollar bullish.”