Trump wants a weaker dollar. That will be easier said than done.
Subscribe to enjoy similar stories. As much as Donald Trump says that he wants the U.S. dollar to weaken, Wall Street keeps betting that his presidency would deliver the opposite.
The truth may end up lying somewhere in between. The WSJ Dollar Index is up nearly 2% from a month ago. Most analysts see this as a reflection of the “Trump trade" that overtook financial markets in October—that is, bets that the Republican candidate will win the Nov.
5 election. To be sure, the outcome remains too close to call. Market makers at top banks warn that most investors have avoided leaning one way or another.
Part of the dollar’s rise is explained by strong economic data, which pushed up Treasury yields because of the expectation that the Federal Reserve won’t have to cut interest rates as quickly. Also, the Trump trade is getting muddy: Investors are no longer using the playbook of pivoting toward “old economy" industries and smaller, domestically oriented firms, probably realizing that it yielded poor long-term results after 2016. Nevertheless, most traders agree that those investors who are actively positioning themselves for a particular result tend to favor a Trump victory.
Shares in Trump Media and Technology Group, the meme stock attached to the social-media platform owned by the Republican candidate, have more than doubled in value over the past month, despite big falls Wednesday and Thursday. Also, calculations by the Fed suggest that the rise in Treasury yields isn’t fully explained by expected higher rates. Analysts believe budget deficits would be larger under Trump—particularly if Republicans sweep Congress—than Kamala Harris.
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