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FX Viewpoint: USD: US elections 2024

19 Feb 2024

Key takeaways

  • The 2024 US presidential and congressional elections are scheduled for 5 November

  • We list out some key dates to watch, together with moving parts that could impact the USD

  • In our view, the likely implications for the USD appear mixed,but, for now, heightened uncertainty should support the USD

A Biden-Trump presidential election race is widely expected

The 2024 US presidential and congressional elections are scheduled for 5 November. Table 1 shows some of the key dates to watch. The state-by-state nominating contests have commenced and will continue to run through early June. The candidates for president and vice president will then be formally nominated at the Republican national convention scheduled for July and the Democratic national convention scheduled for August. According to the RealClear Politics (RCP) betting odds average (a measure of the probable outcomes according to betters), a race between former president Donald Trump (with an 87% probability of securing the Republican presidential nomination) and incumbent president Joe Biden (with a 61% probability of securing the Democratic nomination) is widely expected (as of 12 February 2024).

Congress is key for significant fiscal changes

The US president cannot set policy alone in most cases, given that Congressional approval is needed for passing legislation. The potential for big legislative changes will greatly increase if one party manages to win the White House and both chambers of Congress in the 2024 election – sometimes referred to as a “clean sweep.” However, if government remains divided after the election, then the scope of big changes is diminished since any new legislation will continue to require compromise between Republicans and Democrats.

Source: HSBC

Heightened uncertainty should support the USD over the near term, in our view

We examine some of the election-related issues that could impact the USD in the run-up to the election, and beyond in Table 2. The multiple channels of influence mean the election can impact the USD in various ways, ensuring it cannot be ignored, even if the takeaways from each element end up creating a mixed picture for the USD. However,it is also important to remember that the USD’s path is not only determined by the election, and that politics is just one part of the equation. In summary, likely implications of US elections for the USD appear mixed, but, for now, we expect heightened uncertainty to support the USD.

Source: HSBC forecasts

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