Welcome to our latest US political update with 69 days until the presidential election.
Each week we will take a look at the likes of policy changes, polling shifts, the continued impact of Covid-19, the geopolitical stances that the candidates are taking and of course, the economic impact on the US, the dollar and global trade. The US presidential election remains the most important political event globally and markets are starting to pay attention to the run-in to November’s polling day.
Following the Democratic convention last week, the Republicans get their turn this week with their convention also held online apart from the President’s speech on Thursday.
Ahead of his speech, President Trump has announced a series of policy initiatives that he will fight for if voters give him another term in the White House. The three main areas of focus are jobs, Covid-19 and China, with promises including creating “10 million new jobs in 10 months”, “develop a vaccine by the end of 2020” and “bring back 1 million manufacturing jobs from China” as well as slightly more offbeat ambitions such as “launch space force, establish permanent manned presence on the moon and send the first manned mission to mars” and “prosecute drive-by shootings as acts of domestic terrorism”.
If you thought the original Trump campaign was about Making America Great Again, this one is about Making America Great Again but with bells on.
Polling leads and losses
It is really only once the polls calm down after the conventions that we can finally get a handle on how the American public is likely to vote on election day. As things currently stand, Vice President Joe Biden currently has an 8% lead in the polls over President Trump. We would expect President Trump will receive a polling bounce following the Republican convention and that the average gap between the candidates will fall back towards the 6% mark in the coming weeks.
Outlook for the USD this week
We remain bearish about the USD going forward for a number of reasons not limited to the political landscape in the US. In the short term, real rates i.e. interest rates once inflation is accounted for, and the prevailing belief that the Federal Reserve will continue to announce policies to stimulate the US economy in the coming months.
Fed President Jerome Powell will speak at the Kansas City Federal Reserve’s Jackson Hole economic symposium this Thursday and we expect that to be the catalysts for further weakness in the greenback.
Have a great week.