US election outlook: how could this affect USD pair price action?
Explore how upcoming US election results and contrasting monetary policies might influence USD currency pairs amid economic uncertainties and evolving global market dynamics.
Key points
- CAD depreciates to 1.39407 against USD, weakest since October 2022
- BoC rate cut forecasts contrast US Fed's less dovish stance
- Mexican peso reaches 2-year low amid US election uncertainty
- Trump's tariff threats add to Mexico's economic pressures
- US dollar's future influenced by election outcomes and economic data
CAD trends toward weakest levels against USD in 2 years
The Canadian dollar has depreciated to 1.39407 against the US dollar, marking its weakest since October 30, 2022, when it hit 1.38084. This decline is influenced by lower oil prices and forecasts for Bank of Canada (BoC) rate cuts in December. The BoC recently reduced its key interest rate by 50 basis points and hinted at further cuts, contrasting with the US Federal Reserve's less dovish stance. This situation is compounded by Canada's slowing inflation and softened labor market, further impacting the Canadian dollar's strength against the USD.
USD/CAD price history
Peso price election pre-election: USD/MXN
Amid the US presidential election uncertainty, the Mexican peso has depreciated to its weakest level in over two years past 20.1 per US dollar. Economists attribute this to the 'Trump trade' factor—anticipation of a stronger dollar due to Donald Trump's proposed hawkish policies. These include potential tariffs on Mexico, such as a 200% surcharge on imported vehicles, which threatens Mexico's economy. Political instability also looms with the planned resignation of eight Mexican Supreme Court justices, despite Mexico's GDP growth of 1% in Q3, marking its fastest pace since 2023.
USD/MXN price history
How could upcoming election results affect US dollar?
Investors are keenly assessing the economic impacts of each US presidential candidate on the dollar. Upcoming movements may depend on trade and monetary policies, with key reports on unemployment, core PCE, and nonfarm payrolls on the horizon. Donald Trump favors a weaker dollar to boost exports, whereas Kamala Harris's potential presidency might lead to a less adversarial trade stance, reducing investor premiums. These policy positions, alongside the Federal Reserve's upcoming meeting, are expected to significantly influence the dollar's path.
What’s next for USD?
The US dollar's near-term trajectory is shaped by domestic and international factors. The Canadian dollar's depreciation, driven by oil prices and BoC rate expectations, supports the USD, especially if the Federal Reserve maintains its stance. The presidential election adds complexity, potentially strengthening the dollar under Trump’s policies or weakening it if Harris prevails. The interplay of election results, central bank policies, and economic data—like upcoming unemployment and core PCE reports—will crucially dictate the dollar's future movements.
How to trade US dollar
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on USD pairs
Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.
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