Trump’s rising election prospects fuel surge in dollar demand

With the 2024 U.S. presidential election approaching, increasing expectations of a Donald Trump victory are driving demand for the U.S. dollar, according to a report by Standard Chartered.

Financial markets are reportedly assigning a 70% probability to Trump’s win, pushing the dollar up nearly 3% against the Euro over the past month.

Analysts at Standard Chartered attribute around 60% of the dollar’s October gains to these heightened election expectations, with prominent prediction platforms like Polymarket and PredictIt estimating Trump’s chances at 64% and 58%, respectively.

The bullish sentiment reflects a market pivot, as current data suggests a tight race between Trump and Democratic contender Vice President Kamala Harris.

Beyond the election, the dollar’s recent strength is also supported by robust U.S. economic data, including a strong jobs report. In contrast, the 2020 presidential race had weakened the dollar in October, as markets anticipated a Biden victory that would bring fiscal stimulus. This time, the possibility of Trump’s return to office has bolstered the greenback, reflecting broader confidence in U.S. economic stability under his potential administration.