The U. S. dollar will weaken sharply if Donald Trump wins the presidential election in November, according to Bloomberg’s Mark Cudmore. But it’s less clear if the sell-off has legs beyond his potential inauguration in January.
Given some of the pronouncements made during his campaign to date, markets will rightly be concerned about the direction of Trump’s policy. But, without taking a view on whether he actually intends to preside as indicated, the reality is that he’ll be severely constrained in his ability to dictate policy.
Recent polls show that a Trump victory isn’t the base case. But, with three months until the election, its worth evaluating what could be the initial impact of a Trump victory.
There’s a valid risk that the credibility of the greenback as the world’s reserve currency may be undermined amid fears that Trump may rip-up or ignore previous treaties and trade agreements.
This post was published at Zero Hedge on Aug 9, 2016.