‘Kamala-mentum’ Puts ‘Trump Deals’ On Ice As Dollar Loses Momentum By Investing.com

Investing.com — Growing prospect of Democratic victory prompts traders to ditch ‘Trump trades’, including dollar bid, Macquarie says, as Democratic presidential candidate Kamala Harris continues to evoke more ‘Kamala-mentum’ in the race for the White House.

“We believe the growing prospect of a Democratic victory in the presidential race has prompted a resurgence of ‘Trump trades’, which included a stronger view of the USD,” strategists at Macquarie said in a note on Tuesday, while the loss continues.

A strong dollar and Trump’s potential election victory have become closely linked, as the former president’s proposed core policies — including tax breaks, immigration restrictions, tariffs — would be “considered to be more inflationary, thus keeping policy rates higher.” higher than otherwise”, they said.

More dollar pain could follow next week, the strategist added, if Harris is able to get his platform up at the Democratic National Convention this week.

“A post-convention rebound in Kamala Harris’ polls next week could even weaken the USD a bit more,” they added.

The “Kamala-mentum” unleashed by President Joe Biden’s resignation and Harris’ endorsement was driven by a “more effective (campaign) than President Joe Biden’s.”

Harris’ quick move into the Democratic primary also caught the Trump team by surprise and gave them “fewer ways to attack Harris than they had for Biden,” Macquarie said.

“With Trump’s attacks neutralized, this probably caused the level of enthusiasm in his base to drop as well,” he added.

Beyond politics, however, the dollar’s weakness since early August is surprising, Macquarie says, because recent economic data, including retail sales, initial claims, ISM services “pointed to renewed relative strength in the US on concerns about entering the recession. at the end of July and the beginning of August”.