Citi's research reveals bullish and bearish potential for the US dollar in light of the US Presidential Election in November 2024.

The United States will hold its 60th presidential election on November 5, 2024. The political contest will likely bring back the rivalry between Joe Biden of the Democratic Party and Donald Trump of the Republican Party, similar to the 2020 US Presidential Election. 

Analysts are re-evaluating the market performance history of the past few years to predict the impact of each candidate's victory. The following is one of the research results of analysts from a leading investment bank, Citi.


Citi analysts expect the US dollar to surge 5% and the bond market to experience a sell-off if the Republican Party and Donald Trump win a landslide victory in the November elections. By a landslide, they mean that Trump will become US President again, and Republicans will dominate Congress. 

Citi's estimates are based on two historical records. First, the US dollar rallied about 5% after Trump's victory in 2016. Second, the US dollar collapsed by about 5% when Biden defeated Trump in 2020. 

"We think +5% is the right amount of potential dollar strength to be associated with a Trump victory accompanied by a red wave (Republican party wins in the US House and Senate -ed)," said Citi analysts, as reported by Reuters, "Therefore, we expect dollar highs - potentially this year - to be seen around the election." 

A Republican landslide victory could also trigger a sell-off in the US bond market. The victory could result in new tax cuts, increased stimulus, and the imposition of duties on trade with rival countries such as China. These policies require larger budgets so the market will be increasingly concerned about rising US debt and deficits. 

Citi indicates that Donald Trump will continue the current tax cut policy and lower corporate taxes further. The extension of the current tax cut policy alone could increase the US government deficit to more than $3 trillion in the next 10 years. 

A Joe Biden victory is unlikely to result in such a large increase in the US deficit. Citi predicts that Biden will continue the current tax cut policy while raising some corporate taxes.