Looking across global FX markets, one could be forgiven for thinking that the market is starting to position for a Donald Trump win. In an entertaining interview with Bloomberg on Tuesday, Trump went large on using tariffs should he make it back into the White House. As columnists have said, no one should be surprised if this happens. With the election less than three weeks away, it looks like investors will be reluctant to position against such threats even though the election outcome remains very uncertain, ING’s FX analyst Chris Turner notes.

DXY can dip back to 103.00/103.20

“The most immediate casualty from that interview was the Mexican peso. When it comes to nearshoring, Donald Trump wants US corporates to shorten supply chains not just into Mexico, but into the US itself. He intends to use tariffs to ensure that will be the case. In addition, when it comes to broader tariffs – particularly on the European auto industry – Trump said that tariffs of 10% would not be enough.”

“For the US today, the highlight will be the September US retail sales data and weekly jobless claims. Retail sales are expected to remain reasonable, with the control group at 0.3% MoM. Weekly initial claims are expected to remain high at 258,000, but uncertainty about the impact of Hurricane Helene and the port strike will prevent the market from overreacting to this data.”