For the Dollar, the Fed is more important than the Senate elections

Tradehay.com: 05/01/2021 - 11:38

For the Dollar, the Fed is more important than the Senate elections

While all eyes are on the results of the two Senate races in Georgia today, more important to the fate of the dollar will be what the Fed does this year. That means any political upheaval will be prone to a quick reversal unless the central bank of the United States offers a directed reinforcement measure.

It would not be surprising if risk-on sentiment returns, causing the Dollar to fall even lower, if Republicans hold firmly in the Senate as it means Congress will be divided, leading to adoption. bills that cause market concern have become more difficult. Conversely, the dollar could appreciate if Democrats win both races and interest rates begin to rise higher amid a "reflation trade".

Last year taught us that if central banks, especially the Fed , are happy and able to keep interest rates low by 'taps' QE, the market will become a "party" of Short USD. whatever else is going on in the world.

Therefore, closely monitoring the potential signal of a change in the Fed's QE programwill be much more important than who holds control of the Senate.

David Finnerty, Bloomberg