Both Trump and Clinton could be bad for the dollar

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One of the big picture trends over the last two years has been the stronger US dollar.

Back in May, analysts had even been arguing that the greenback had some more room to go this year and next in light of the better-performing economy and what at the time seemed to be a more active Fed.

But, over the last few months the US dollar index has remained more or less flat, hovering near a range of 93 to 98.

And now, Jefferies' David Zervos argues that both US presidential candidates could potentially lead to a weaker American currency, in part due to their positions on free trade — with Donald Trump being the more negative influence.

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Hillary Clinton, Donald Trump face off in first presidential debate
U.S. Secret Service agents walk onto the debate floor before the first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Workers on the stage prepare for the first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Brian Snyder
A TV cameraman works during a rehearsal for the first U.S. presidential debate at Hofstra University in Hempstead, New York September 25, 2016. REUTERS/Rick Wilking
The media center for the first U.S. presidential debate is seen at Hofstra University in Hempstead, New York, U.S. September 24, 2016. REUTERS/Rick Wilking
Ivanka Trump arrives for the first presidential debate at Hofstra University in Hempstead, New York on September 26, 2016. / AFP / Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
Chris Christie, governor of New Jersey, waves to an attendee in the audience ahead of the first U.S. presidential debate at Hofstra University in Hempstead, New York, U.S., on Monday, Sept. 26, 2016. Hillary Clinton and Donald Trump meet Monday night for a presidential debate that will give them their broadest exposure to voters and promises to be a pivotal moment in a long and increasingly close race. Photographer: Daniel Acker/Bloomberg via Getty Images
HEMPSTEAD, NY - SEPTEMBER 26: Republican presidential nominee Donald Trump's wife, Melania Trump greets with Democratic presidential nominee Hillary Clinton's husband and former U.S. President Bill Clinton during the Presidential Debate at Hofstra University on September 26, 2016 in Hempstead, New York. The first of four debates for the 2016 Election, three Presidential and one Vice Presidential, is moderated by NBC's Lester Holt. (Photo by Drew Angerer/Getty Images)
Republican candidate for Vice President Mike Pence looks on before the first presidential debate at Hofstra University in Hempstead, New York on September 26, 2016. / AFP / Paul J. Richards (Photo credit should read PAUL J. RICHARDS/AFP/Getty Images)
Democratic U.S. presidential nominee Hillary Clinton waves after the first presidential debate against Republican U.S. presidential nominee Donald Trump (not shown) at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Adrees Latif TPX IMAGES OF THE DAY
Democratic nominee Hillary Clinton (L) and Republican nominee Donald Trump leave the stage after the first presidential debate at Hofstra University in Hempstead, New York on September 26, 2016. / AFP / Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
Democratic nominee Hillary Clinton (R) gestures next to Republican nominee Donald Trump during the first presidential debate at Hofstra University in Hempstead, New York on September 26, 2016. / AFP / Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
Republican U.S. presidential nominee Donald Trump and Democratic U.S. presidential nominee Hillary Clinton speak during their first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Adrees Latif
Moderator Lester Holt presides over the first debate between Republican U.S. presidential nominee Donald Trump and Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Joe Raedle/Pool
Melania Trump (L-R), the wife of Republican U.S. presidential nominee Donald Trump, sits with his daughter Ivanka Trump, Republican vice presidential nominee Mike Pence and Pence's wife Karen Pence during Trump's first debate against Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S. September 26, 2016. REUTERS/Jonathan Ernst
New Jersey Governor Chris Christie (R) and former New York City Mayor Rudy Giuliani chat as they take their seats ahead of the start of the first debate between Republican U.S. presidential nominee Donald Trump and Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Mike Segar
Dallas Mavericks owner Mark Cuban arrives at the U.S. presidential debate between Republican U.S. presidential nominee Donald Trump and Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Mike Segar
Las Vegas casino magnate Sheldon Adelson sits with his wife Miriam as they await the start of the first debate between Republican U.S. presidential nominee Donald Trump Democratic and U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Promoter Don King Don King (C) speaks with Las Vegas casino owner Sheldon Adelson prior to the first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Mike Segar
Former U.S. President Bill Clinton (C) talks with his daughter Chelsea Clinton prior to the first presidential debate between Republican presidential nominee Donald Trump and U.S. Democratic presidential candidate Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. At right is Marc Mezvinsky, the husband of Chelsea Clinton. REUTERS/Carlos Barria
Republican U.S. presidential nominee Donald Trump and Democratic U.S. presidential nominee Hillary Clinton speak during their first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Adrees Latif
Republican U.S. presidential nominee Donald Trump reacts during the first presidential debate with Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Democratic U.S. presidential nominee Hillary Clinton smiles during the first presidential debate with Republican U.S. presidential nominee Donald Trump at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Brian Snyder
Republican U.S. presidential nominee Donald Trump reacts during the first debate with Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Democratic U.S. presidential nominee Hillary Clinton speaks during the first presidential debate with Republican U.S. presidential nominee Donald Trump at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Republican U.S. presidential nominee Donald Trump speaks as Democratic U.S. presidential nominee Hillary Clinton looks on during their first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Republican U.S. presidential nominee Donald Trump speaks during the first presidential debate with Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Debate moderator Lester Holt of NBC News replaces his jacket after a technician fixed his earpiece before the first debate between Republican U.S. presidential nominee Donald Trump and Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S. September 26, 2016. REUTERS/Jonathan Ernst
Republican U.S. presidential nominee Donald Trump pauses during the first debate with Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Lucas Jackson
Democratic U.S. presidential nominee Hillary Clinton and Republican U.S. presidential nominee Donald Trump speak during their first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Adrees Latif
Republican U.S. presidential nominee Donald Trump and Democratic U.S. presidential nominee Hillary Clinton discuss a point during their first presidential debate at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Joe Raedle/Pool
Donald Trump, 2016 Republican presidential nominee, speaks during the first U.S. presidential debate at Hofstra University in Hempstead, New York, U.S., on Monday, Sept. 26, 2016. Hillary Clinton and Donald Trump meet Monday night for a presidential debate that will give them their broadest exposure to voters and promises to be a pivotal moment in a long and increasingly close race. Photographer: Andrew Harrer/Bloomberg via Getty Images
Democratic U.S. presidential nominee Hillary Clinton pauses during the first presidential debate with Republican U.S. presidential nominee Donald Trump at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Joe Raedle/Pool
Republican U.S. presidential nominee Donald Trump sips water during his first debate with Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Joe Raedle/Pool
Republican U.S. presidential nominee Donald Trump (2nd from L) chats with members of his family after the conclusion of his first debate with Democratic U.S. presidential nominee Hillary Clinton at Hofstra University in Hempstead, New York, U.S., September 26, 2016. REUTERS/Adrees Latif
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"If the US moves away from free trade agreements, as Trump has suggested, returns on capital will fall. Domestic labor may gain but the gains shouldn't exceed the losses for capital income, and if the losses to capital income are large enough, even labor may lose. Lower returns on capital should lower real rates and lower the dollar, just as we saw with the GBP following the Brexit vote," he wrote in a note to clients.

"I believe that a Clinton win would also usher in a minor pivot toward higher trade barriers so that she too would be USD bearish, but less so," he added.

The US dollar index is up by 0.3% at 95.73 as of 12:58 p.m. ET.

Screen Shot 2016 10 03 at 12.58.24 PMIan Walton/Getty Images

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Markets

S&P 500 2,348.69 -7.15 -0.30%
DJIA 20,547.76 -30.95 -0.15%
NASDAQ 5,910.52 -6.26 -0.11%
DAX 12,048.57 21.25 0.18%
NIKKEI 225 18,620.75 190.26 1.03%
HANG SENG 24,042.02 -14.96 -0.06%
USD (per EUR) 1.07 0.00 0.03%
USD (per CHF) 1.00 0.00 0.02%
JPY (per USD) 109.07 0.01 0.00%
GBP (per USD) 1.28 0.00 0.04%

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