Investing.com — The greenback has loved a lift from the return of the “Trump commerce” as Republican presidential candidate Donald Trump’s possibilities of returning to the White Home look like on the up, however UBS believes stronger rallies needs to be bought as Trump is not an outright optimistic for the buck.
“We proceed to anticipate a greenback bounce in case of a Trump victory. Nevertheless, we do not see Trump as outright USD-positive over the medium time period and due to this fact advise promoting stronger dollar-rallies,” UBS stated in a be aware on Friday.
The decision comes because the U.S. election, simply over two weeks away, stays too near name, although Trump has gained floor in current weeks and now has a slim lead over Vice President Kamala Harris in some polls.
The current greenback rally has been attributed partially to the market pricing in the next probability of a Trump victory, with the buck seen as one of many so-called Trump-trades which have gained traction.
The enhance to the greenback from the “Trump-trades” could show fleeting, UBS says, forecasting the euro-dollar to maneuver towards 1.16 in 2025, suggesting restricted upside for the buck over the long run.
Within the broader forex market, in the meantime, some rising market currencies, which have struggled within the current weeks in opposition to the greenback, are more likely to stay in favor.
“We expect the South African rand, supported by a extra reform-minded authorities, and the Mexican peso, which already costs in a hefty threat premium for political turmoil, are good choices to gather carry over the medium time period,” UBS stated.