1. Pro-Business and Tax Policies:

• Strengthening the Dollar: Trump’s policies have often been perceived as pro-business, especially with tax cuts and deregulation. Such measures could stimulate economic growth and attract foreign investment, which tends to strengthen the US dollar. In 2017, the dollar saw initial strength following the passage of tax reforms under his administration.
• Deficit Concerns: On the flip side, Trump’s proposals to increase government spending (especially in defense and infrastructure) without corresponding tax hikes could lead to concerns about higher fiscal deficits. This could put downward pressure on the dollar if investors perceive this as unsustainable.

2. Trade and Global Relations:

• Trade Wars or Agreements: Trump’s “America First” stance has led to trade tensions, particularly with China. While this could lead to short-term volatility, some market participants believe that a Trump victory could lead to more favourable trade agreements or a de-escalation of tensions, potentially boosting confidence in the dollar.
• Global Uncertainty: Trump’s unpredictable style and frequent use of tariffs could contribute to global economic uncertainty, which might cause investors to seek the US dollar as a “safe haven” asset, boosting its value.

3. Monetary Policy Expectations:

• Impact on the Federal Reserve: Trump continues to advocate for lower interest rates, it could influence the Federal Reserve’s stance on monetary policy.

4. Investor Sentiment and Global Stability:

• Volatility: Markets tend to react to political uncertainty, this victory could lead to short-term volatility, especially if it results in a shift in policy or an unexpected event. In such cases, the dollar might experience fluctuations as investors adjust their expectations for US economic and political stability.

Ultimately, the US dollar’s response to Trump winning in the short, medium and long term, depends on a mix of policy announcements, fiscal strategies, and global economic dynamics.

Here at Spartan FX we can help you to navigate this potentially volatile time and manage your payments.

If you want any certainty with your currency exchange, feel free to contact us and we can explain all of the options available to you.

Contact us on +44(0)203 984 0450 or send an email to personal@spartanfx.co.uk