USD: Markets price in macro versus Trump narrative – ING
02.07.2024, 14:29

USD: Markets price in macro versus Trump narrative – ING

With the exception of some strengthening in the euro and the Norwegian krone thanks to a post French-vote relief, the dollar has had a good start to the week. For the second time in five days, the US Dollar (USD) is appreciating on the back of higher perceived chances of Donald Trump winning the US presidency, ING FX strategist Francesco Pesole Notes.

USD may benefit if Trump wins

“It is now clear that investors have made the Trump-stronger dollar link. This has also been our interpretation given the prospect of lower taxes, inflationary protectionism measures and greater geopolitical risks under Trump. Given the market’s growing scepticism of Biden’s chances against Trump, there is a possibility that him stepping down would be a dollar-negative development.”

“On the macro side, the June ISM manufacturing index for the US slightly softened to 48.5 yesterday, indicating continued contraction. Key components remained below the 50 threshold and inflation pressures eased, with the prices paid component dropping to 52.1. Construction spending fell unexpectedly, emphasising the reliance on consumer activity for economic growth.”

“Today, JOLTS job openings for May have decent market-moving potential. Remember how a surprise drop to 8059k a month ago drove the dollar moderately lower. Expectations are for another decline to 7950k today. The other big event is Federal Reserve Chair Jerome Powell participating in a Sintra panel with ECB President Christine Lagarde.”

 

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