Historically, this would weaken a sitting President, yet in Mr. Trump’s case may improve his chances of winning re-election in 2020. Meanwhile, the US economy continues to do well, while the Federal Reserve is publicly debating its next interest rate decision, which may affect the greenback, looking ahead.

US business activity upbeat, new home sales rise

Elsewhere, America’s economic performance this week has been largely positive. For example, according to IHS Markit’s US composite PMI for September this Monday, the United States reached 51.0, above economists’ forecasts for 49.6. This may indicate that US business activity continues to expand, when investors had predicted that it would contract.

In addition, this Wednesday the US Census Bureau published that US new home sales increased by +7.1% in August, to 713,000 units, above economists’ hopes for +3.5%, to 660,000 units. This suggests that America’s housing market is prospering, perhaps following the Federal Reserve’s (Fed) recent interest rates cuts.

Fed debates next interest rate decision

In addition, following the Fed’s decision to lower US interest rates last week, to 1.75%, -2.0%, the US central bank’s policymakers have begun to debate the Fed’s next steps.

For example, Fed Vice Chairman Richard Clarida, who supported last week’s reduction in borrowing costs, remarked recently that “There is a slowdown in global capital spending and global manufacturing and also some pretty important dis-inflationary forces.” For Mr. Clarida, this vindicates the cut.

However, Boston Federal Reserve President Eric Rosengren, who opposed last week’s cut, has argued that reduced borrowing costs could contribute to a stock market bubble, and lead households and businesses to take on too much debt. This debate could affect the value of the US dollar in future.

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