UBS Global Wealth Management argues that the dollar is to weaken further no matter who wins the election in November
The firm's strategists lay out two scenarios for the greenback ahead of the elections:
- A so-called blue wave i.e. Democrat victory will likely lead to continued dollar weakness as reversing Trump's stimulus measures will create fresh uncertainties with new policies unlikely to bring about a similar boost to the economy
- A so-called red wave i.e. Republican victory will likely lead to slower dollar depreciation, but still expected to decline, as stronger equity markets should help out the greenback alongside Trump's stimulus measures
Looking ahead, they expect next year to bring about more normalisation in global growth conditions and they argue that such a situation would benefit the euro.
This just adds to the growing chorus over the past week or so that has been calling for a weaker dollar over the next few years: