Forex
US Dollar Faces Modest Bearishness Amid Congressional Gridlock
TD Securities' Jayati Bharadwaj expects a divided Congress to maintain macro fundamentals as the main driver for foreign exchange, keeping the US Dollar on a modestly bearish path into year-end.
The bank argues that fiscal gridlock will narrow U.S.-Rest of World growth and rate differentials while supporting institutional credibility.
A Democratic sweep is seen as initially USD-positive, whereas continued GOP control is viewed as the most USD-negative outcome. Bharadwaj notes that gridlock keeps macro fundamentals in control, leaving the primary driver of FX to be macro factors.