Dollar slips as FX traders gird for US election outcome

Watching the dollar is going to be critical tonight. That will be the most liquid and the most transparent messaging to what we are getting markets to do, because that's where people can put money to work fast,

said David Zervos, Jefferies chief market strategist, Tuesday on CNBC's "Money Movers."

Levies on trade should increase domestic business activity and reduce U.S. imports. We believe these effects should help more domestic-oriented small-cap companies and raise the U.S. dollar's exchange value,

Paul Christopher, head of global market strategy at the Wells Fargo Investment Institute, said in a note to clients Tuesday

Kamala Harrisvice President

The bigger move in FX markets is going to be the dollar's downside if there's not a red sweep. And particularly if Kamala wins, I think that would be the biggest dollar down move,

Turner said, referring to Democratic nominee and Vice President Kamala Harris

Today everything is just 'wait and see'. Nobody is going to be have any conviction whatsoever until we start getting the first results overnight and that’s where you’ll see markets start to jump around,

Brown said

We judge financial markets are now positioned for a Harris win,

said Carol Kong, a currency strategist at Commonwealth Bank of Australia

While your guess is as good as ours about who will win, we're confident about the scenarios (we) laid out recently: In short, a Trump win or Red wave are bullish for the USD; a Blue Wave will crater the USD,

analysts at TD Securities said in a note

Our central case is that the RBA's first cut will not arrive until Q2 2025, but we see an increasing risk that it takes even longer for cuts to be delivered, or that the RBA misses the easing phase altogether,

HSBC's chief economist for Australia and New Zealand, Paul Bloxham, wrote in a note

We don't think Harris is necessarily bad for the USD over the medium term,

they said

The USD can therefore fall modestly by 1 per cent‑2 per cent this week if Vice President Harris wins and lift materially if (former) President Trump wins,

she said

This could come about because domestic inflation continues to fall only very slowly or because, by the time domestic inflation has eased sufficiently, the global economy is already re-inflating,

he said

They've priced what they think is price-able and that's that,

said Westpac strategist Imre Speizer,

J. P. MorganjP

Ultimately the U.S. election comes down to this - whether the U.S. electorate wants to vote for economic policy continuity, institutional stability and liberal democracy (Harris) or radical trade policy, a further retreat for globalization and strongman democracy (Trump),

J.P. Morgan analysts said in a note

We think this makes sense and reflects the view that a Trump 2.0 would not merely punish China with tariffs, but also pursue universal tariffs which would very much hit open economies like the euro zone and Canada,

ING strategist Chris Turner said

Simply, if Harris wins, we like selling dollar/yen and buying AUDUSD,

said a currency strategists at Citi

Today’s election is closer than a coin toss, highlighting the uncertainty surrounding the outcome,

Monex Europe strategists said in a daily note

The Trump trade is unwinding this morning, we've seen a big pullback in the likelihood of a Republican sweep as implied by prediction markets and polling,

said Karl Schamotta, chief market strategist at Corpay in Toronto

The Fed is more relaxed about inflation and is putting more focus on the jobs market as it attempts to secure a soft landing for the economy,

analysts at ING wrote in a note on Friday

US election outcomes and the resulting tariff risks are consequential to China equity via the intertwined economic, currency, policy, earnings, and valuation channels,

Goldman Sachs analysts wrote on Monday

This shift has weighed on the US dollar, as traders unwind some of the 'USD Trump Trade' premium,

wrote Sycamore, referring to the weekend poll