US Dollar: Fiscal prudence could restore confidence - Rabobank
Rabobank's Senior FX Strategist Jane Foley discusses how the Democrat sweep in Congress initially weighed on the Dollar and Nasdaq futures, but both quickly pared losses.
Jane Foley, Rabobank's Senior FX Strategist, explains that the initial Democratic sweep in Congress initially led to a decline in the US Dollar and Nasdaq futures. She points out that the market initially feared tighter fiscal policy could result in lower US yields, which would be negative for the Dollar. However, improved budget prudence could ultimately enhance the greenback's credibility and status as a safe haven.
The DXY dollar index has already begun to recover some of its early losses. While short-term implications of more prudent fiscal policy appear negative for the USD, the medium-term outlook suggests a more complex picture. The market's concern over the US treasury market's "exorbitant privilege" has periodically resurfaced since Trump's tariff announcement in April 2025.
A more diligent budget policy could mitigate these fears, countering the initial negative impact on the USD from increased fiscal prudence post-election. Therefore, more fiscal prudence may positively influence the greenback's credibility and safe-haven status in the long run.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
