The results of the US election will clearly determine the course of fiscal policy in the US. A Trump victory is widely expected to extend the large US budget deficit more than a Harris one, although the magnitude It will also clearly depend on the makeup of Congress, notes Jane Foley, Senior FX Strategist at Rabobank.
Trump means Fed will stop tapering cycle by February
“In Rabobank’s view, a Trump victory could result in the end of the Fed’s rate cut cycle by January. This suggests a stronger outlook for the USD next year, which would likely be further bolstered by a wave “Beyond 2025, the inflationary implications of trade tariffs will be complicated by the detrimental impact they will likely have on US growth (and beyond).”
“A Harris victory in the US election could also increase the US budget deficit, although a divided Congress could limit changes in fiscal policy and leave the Fed’s rate cut cycle ongoing.” “Consequently, a Harris presidency would likely trigger a short-term sell-off in the USD, although the outlook for 2026 is less clear.”
“We will reassess our USD forecasts following the US election results. Either way, we continue to favor buying AUD/NZD on dips, although a less dovish Bailey on November 7 could trigger some upside for GBP/ AUD. The Eurozone is trying to regain fiscal prudence, which should reduce inflationary headwinds for the ECB. Assuming risk appetite remains, we also see upside potential for AUD/EUR towards 0.62.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
