The Forex Market & POTUS: What Can History Teach Us?

As the 2020 US Presidential Election countdown clock ticks down to just 50 days, we thought we’d take a little look back at the history books to see how the forex market has fared under previous presidents. Are there lessons to be learned for Trump vs. Biden? Read on to find out and you’ll also get the regular lineup of market events to watch out for as a bonus. Lucky you!

Image for post

He’s just one man

President Trump was starkly reminded of this when he first came to office in 2016. Running the US government isn’t quite the same as controlling a commercial empire from floor 1005 of Trump Tower.

Because of this, there’s rarely a direct correlation between the actions of a president and Forex market performance. But, as 1 of the 3 super-powerful cogs of the US government (and its public face), he, of course, has influence.

A clear party correlation?

Since the late 1980s, we can see a clear pattern showing the US Dollar gaining under Democratic presidents and suffering overall losses under Republicans. Check the chart below. ⬇

We can see that Clinton and Obama both held office during periods of progression for the Dollar. Clinton, in particular, left 1600 Pennsylvania Ave. with the Buck in a very strong position, relatively speaking. Later, Obama seemingly reversed the declining fortunes of the USD under Bush Jr.’s presidency.

Image for post
Image for post

USD Index Performance by President

Victims of circumstance?

The fact that we’ve singled out party politics here arguably has very little to do with anything.

These presidents all had things to deal with. Some more than others. Take President Bush Jr, for example, who presided over the worst terror attacks ever to take place on US soil; the subsequent “War on Terror”; Hurricane Katrina; and the 2008 Financial Crisis. All of which (bar Katrina), were major global events that placed a huge strain on the US economy.

Arguably, neither Clinton nor Obama had such huge crises to deal with, despite the latter inheriting the “War on Terror”. Most of the issues and successes they faced were domestic-based.

Up until this year, Trump looked like he may be able to buck this trend until COVID hit and the US economy stalled.

What can we learn?

  1. Presidents are just one part of the government and, constitutionally, can’t have too much impact on a personal level.
  2. The individuals and parties can only play the cards they’re dealt with — crises, wars, global issues, each plays a part in the strength of the USD.
  3. This is just a tiny snapshot of US history, don’t base any investing decisions on it!

What about 2020?

Whoever wins the election, Rep. or Dem, will face a crisis right off the bat as covid-19 continues to dominate news.

How will the USD look this time in 4 years? We’ll have to wait and see…

Who do you think will win the 2020 Presidency?

What’s up in the markets this week?

Monday

Tuesday

Wednesday

● The US will give us a glimpse at its monthly Retail Sales numbers (USD)

● And the Fed will also announce its own Interest Rate Decision (USD)

Thursday

● The BoJ will announce Japan’s Inflation Rate Decision (JPY)

● Ahead of the BoE announcing the UK’s own Inflation Rate Decision (GBP)

Friday

Here at Contentworks we closely follow market movements and prep all kinds of content that we think your traders would love to read. If you agree, get in touch and find out how we can help you.

Speak soon!

The Contentworks team

Contentworks is a content marketing agency that's all about telling your story and achieving your goals. Unless you want to climb Everest.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store