The US presidency elections have taken centre stage and US Dollar exchange rates will likely be driven by the potential outcome.

US Dollar exchange rates volatile on TV debate

With polls showing a much closer than expected race to the White House the TV debate between Trump and Clinton this evening could be crucial. One poll by Rasmussen had Trump at 44%, Clinton at 39%. Others have generally reflected a Clinton win but only marginally. We know Donald Trump is very experienced in front of the camera and can play the media to his advantage. Interviewing him has been compared to trying to catch a fish in a fast flowing river. This evening’s debate could provide some real insight into the candidates and their policies although we might find it descends into something more akin to a school playground argument. Nonetheless entertaining it is sure to be and its impact on exchange rates should not be overlooked.

Americans are known for their love of TV with the average American watching 5 hours of TV per day. It is suggested over 20% of the electorate is currently undecided so the outcome and performance of the candidates is critical to both campaigns.

Whilst the US dollar has appeared oblivious to the election so far I think politics will become more of a driving force and tonight’s debate could be a turning point. I would personally expect Trump to come off better, whilst he is bound to drop some kind of clanger, the recent terror attacks have played into his hands and he will undoubtedly play this card very strongly.

US Dollar exchange rates and data this week

Interest rates still remain a key driving force on the US Dollar, last week the Fed held off causing the dollar to weaken towards the end of the week. The next meeting is one week before the US election which for me makes it very difficult for the Fed to make the call then. December seems more likely but we will have to see who is in charge of the economy by then. Janet Yellen is the Fed Chairlady and has said politics is not part of their decision making process. I find this difficult to fully believe.

Thursday is a very important day for the US Dollar this week with US GDP (Gross Domestic Product) data, New Home Sales and a speech by Yellen. Wednesday and Thursday sees a number of speeches by members of the US Federal Reserve. With the decision to hold rates at 7-3 any signs of deviation by members could stoke volatility on US Dollar exchange rates.

Sterling remains at over 30 year lows against the US Dollar presenting unbelievable levels for US Dollars sellers for pounds. Whilst the prospect of a Fed hike looms and could support further US Dollar strength longer term, the Election will I believe take centre stage very soon. This will undoubtedly lead to a weaker US dollar as the prospect of a Trump Presidency and his plans and impact on the global economy are factored in.

With the US elections likely to play on GBPUSD exchange rates, clients looking to buy or sell US Dollars should get in touch to discuss your options. Call our trading floor on 01494 725 353.


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