How Will the US Presidential Election Impact Currency Values?

The United States is just 6 weeks away from electing a new President. Let's talk about how that could affect the US Dollar in the coming weeks and beyond.

Xe Consumer

September 22, 2020 3 min read

American flag flying above the White House in the United States

We’re just 6 weeks away from the United States presidential election. For the US citizens, these coming weeks are going to be a whirlwind as we lead up to voting day.

One of the areas that this election could have a major impact is on the value of the US dollar. Earlier events this year such as the coronavirus pandemic have already led to fluctuations in the dollar’s value, and the election of a new president—and all that comes with it—could potentially lead to more.

Have past elections had an impact on the dollar?

According to historic data, yes! During the 2012 presidential election, the value of the US dollar overall remained fairly static, with many opting to take the “sit and wait” strategy in the midst of uncertainty over who would take the office. The 2016 presidential election, on the other hand, resulted in a significant spike in the value of the dollar, likely as a result of expectations that then-incoming President Donald Trump’s plan to boost fiscal stimulus would benefit the US dollar.

Presidential elections aren’t the only ones that impact currency values—the 2014 US midterm elections saw the US dollar taking a multi-year high against several currencies (including the Japanese yen, Euro, and Swiss franc) due to expectations of a Republican Party-controlled Senate. On the other hand, the 2018 midterm elections led to a dip in the US dollar after Congress saw a split in power between the two major parties.

Within the past 6 months, you’ve likely heard the phrase “these uncertain times” more times than you’d like. The truth is, uncertainty can lead to unpredictable behavior in the financial markets, and the potential election of a new president is one of the most uncertain times for the United States. 

What’s the forecast?

As always, there’s no way of knowing for certain what’s going to happen in the currency markets. Additionally, you’ll see vastly different predictions for the value of the dollar depending on who’s forecasted as winning the election. While many major banks and financial experts are predicting that the US dollar will finish strong against other major world currencies, others are predicting weakening heading into Voting Day.

Mark your calendar!

While the markets are subject to change at any time, there are a few key upcoming events that could lead to changes in the markets:

  • September 29 - First Presidential Debate

  • October 15 - Second Presidential Debate

  • October 22 - Third Presidential Debate 

  • November 3 - Election Day

As these key dates pass, make sure to keep checking the currency values on Xe, and keep checking our blog. We’ll be providing further updates on the value of the US dollar and the state of the markets as we approach Election Day.