In a classic “best house in a bad global neighborhood” trade, the US dollar is off to its best start to a year since 2015, rising against each of its major rivals year-to-date. While (relatively) strong economic data and safe-haven demand amidst the coronavirus outbreak have certainly played a role in boosting the buck, an underappreciated driver may be the prospects for President Trump to get reelected.

As the US economy remains on solid footing and the impeachment inquiry fades, Trump’s approval rating is hitting its highest mark since first month of his presidency. Though he still lags behind nearly every modern US president on this measure, the trend is certainly heading in the right direction for the “Keep American Great” crowd. At the same time, possible rival and self-proclaimed “Democratic Socialist” Bernie Sanders is piling up delegates and looking increasingly likely to be the Democratic nominee, a development that punters seemingly believe bodes well for Trump’s reelection odds:

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Source: Predictit, Bianco Research

When it comes to the greenback, President Trump continues to publicly condemn the strength in the US dollar and advocated for interest rate cuts from the Federal Reserve, but buck bulls don’t seem to mind. In recent weeks, the administration has floated a potential middle-class tax cut and large infrastructure package; developments like these and the Trump Administration’s general business-friendly policies have helped boost the value of US stocks and make the US more attractive to global wealth managers in general. As a result, Trump’s approval rating has shown a 70% correlation with the value of the US dollar index over the course of his presidency, according to research by TD Securities:

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As we move toward the ides of March and the general US public starts to tune in, political headlines will increasingly suck the proverbial air out of the room. If those headlines increasingly point to Trump winning reelection, the US dollar could build on its recent gains, with the widely-watched US dollar index potentially breaking back above 100.00 and perhaps challenging 2017’s 17-year high near 103.50:

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Source: TradingView, GAIN Capital

Traders have always been a forward-looking bunch, and with a little more than eight months to go until the US Presidential election, the evidence suggests that they believe another four years of President Trump could keep the US dollar great as well!