Debate Drama: How Trump vs. Biden Could Tip the USD Scales
Hey everyone! With the US presidential debates happening this week, there’s a lot of buzz about how this might impact the US dollar (USD). Political events like these can really shake things up in the financial markets, so let’s break down how the debates could move the needle on the USD.
1. Market Sentiment and Risk Appetite
First off, market sentiment is what matters most. Investors watch these debates closely to get a feel for future economic policies. If a clear frontrunner emerges who seems poised to boost economic growth and stability, the USD could get a nice bump. But if the debates highlight uncertainties or potential policies that could hurt growth, the dollar might take a hit as investors look for safer bets.
2. Trump vs. Biden Policies
While there is likely to be a sizable element of side-show (you can be sure I will have my popcorn ready) we do (sadly) have to remain hopeful that the candidates get down to at least some policy discussions. While immigration and the southern border is likely to take up a lot of the air in the room, the below economic policies are what we should be watching for in terms of USD levers.
Trump’s Policies:
Trump has been known for his tax cuts and deregulation, which are generally seen as pro-business. If he can convey that he’ll continue these policies, it might boost confidence in the USD.
However, his protectionist trade policies, including tariffs on China and other countries, can be a double-edged sword. They might protect some US industries but could also lead to economic slowdowns, potentially weakening the dollar.
Biden’s Policies:
Biden’s focus has been on increasing taxes for the wealthy and corporations to fund infrastructure, healthcare, and education. While these investments could drive long-term growth, higher taxes could be seen as a short-term drag on the economy.
Biden’s emphasis on renewable energy and green jobs might create new economic opportunities, but the transition could come with some uncertainties.
3. Trade Relations
Trade is always a hot topic. Trump’s “America First” approach might initially strengthen the dollar by reducing import competition, but the potential for trade wars could eventually slow down the economy. On the flip side, Biden’s more cooperative international stance might ease trade tensions, potentially boosting global economic activity and supporting a stronger USD.
4. Interest Rate Expectations
The Federal Reserve’s policies are closely tied to the economic outlook. If the debates suggest a stable and growing economy, we might see expectations for higher interest rates, which typically strengthen the dollar. But if economic challenges seem likely, continued low rates or further easing might weaken the USD.
5. Short-term Volatility
Expect some short-term volatility right after the debates. Traders will react quickly to the candidates’ performances and the potential impacts of their policies. This could lead to rapid fluctuations in the USD.
5. Less Important, but Very Funny (but also still important)
If you like to gamble, and have some time on your hands, there are some very exciting options for the debate. Please see the VERY IMPORTANT betting lines below :)
Number of times the word “rigged” will be used: Over/Under 3.5
Number of times Hunter Biden will be mentioned: Over/Under 2.5
Will any candidate walk offstage: +2100
Trump to say “drill baby drill”: +1100
Biden to lose his footing: +1100
Trump to say “Bing Bong”: +2000
Conclusion
So, the US presidential debates this week are set to be a big deal for the USD. Keep an eye on how Trump and Biden’s policies are perceived by the market. Their approaches to economic growth, trade, and regulation will be crucial to market movement in the following days.
Stay tuned for more updates and insights on how political events are shaking up the financial world!