Harris election win may keep USD bears in clover
Sept 19 (Reuters) - The FX market is turning its attention towards November's U.S. presidential election for clues about how dovish the Federal Reserve will be in 2025, after the central bank kicked off its easing cycle with a larger than usual 50 basis point rate reduction.
A victory for Kamala Harris on Nov. 5 could raise the risk of the Fed's rate cutting cycle running deep and long next year - to the probable detriment of the dollar, courtesy of a belief that U.S. inflation might run cooler with Harris in the White House from January rather than Donald Trump.
Markets currently see a 35% chance of another 50 bps Fed rate cut on Nov. 7 - two days after the election, with a 25 bps cut fully priced. The last Fed rate decision before Joe Biden leaves the White House will be on Dec. 18. FEDWATCH
The USD index fell to 100.21, its lowest level since July 2023, immediately after the Fed's half-point cut on Wednesday.
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(Robert Howard is a Reuters market analyst. The views expressed are his own)
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