LIVE MARKETS-Political dollar risks aren't going anywhere after midterms: Commerzbank

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POLITICAL DOLLAR RISKS AREN'T GOING ANYWHERE AFTER MIDTERMS: COMMERZBANK

The unpredictable policy-making often associated with US President Donald Trump's administration has been considered a risk factor for the dollar for some time.

And according to Commerzbank, even if the Democrats come out on top in the looming midterm elections, that risk isn't disappearing for now.

"If anything, the opposite could be true: since Trump is legally barred from running again in the 2028 presidential election, he could act even more forcefully without having to worry about jeopardising his re-election prospects," Thu Lan Nguyen, head of FX and commodity research at Commerzbank, said.

Trump’s trade and foreign policy approach in particular could become more volatile, she said, noting that exactly those areas are likely the biggest risks for the US currency.

Nguyen did note that a power shift in favour of the Democrats would make it more difficult for Trump's administration to govern, but added that this would only apply to policies that require congressional approval.

While this does, for example, include the US budget, Nguyen noted that key fiscal decisions underpinning Trump’s agenda have already been passed.

In foreign and trade policy, meanwhile, Trump has often issued executive orders, she said.

"USD investors should therefore be prepared for the possibility that hedging costs could once again rise sharply at any time, even after the midterm elections."

(Sophie Kiderlin)

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