Trump wild card for weaker dollar outlook

Investing.com – The U.S. dollar weakened against most major currencies following the Federal Reserve’s accommodative shift and further losses are on track, according to Capital Economics, with Trump’s win the potential wild card.

With the greenback nearing the bottom of its post-2022 range, “our view is that in the near term a period of consolidation is more likely than further sharp declines,” analysts at Capital Economics said in – a note from September 26.

That said, “we still expect it to weaken a bit more during 2025 as short-term interest rates fall further and risk sentiment remains strong amid a global recovery and stock market bubble driven by hope “AI””, Capital. Economy added.

This central scenario is based on policy continuity in the US.

“If former President Donald Trump is elected, we would expect the dollar to appreciate, at least in the short term, in anticipation of higher US tariffs and interest rates.”

Overall, Capital Economics expects this year to end slightly stronger before falling to around 98 by the end of 2025.

At 08:35 ET (12:35 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.1 percent lower at 100.489.