Presidential vs. mid-term congressional elections

The dollar’s most interesting trends appear when mid-term congressional and presidential elections are measured as separate (and smaller) categories. There have been only eight non-presidential congressional elections since 1973, and It shows that the dollar sharply dropped in the 60 and 40 days both before and after election day. However, the index was more bullish in the three weeks before and (especially) four weeks after it.

The longer-term price moves appear less dramatic when compared to their benchmarks, or typical same-length losses during these eight years. For example, the -1.53-percent average decline in the 60 days prior to the election is roughly inline with its 1.40-percent benchmark loss in that period; the
dollar’s performance in the 60 days following mid-term congressional elections tells a similar story.

Also, the dollar’s average gains in the 15 days around these eight elections are unusual because its benchmarks lost ground in these periods. The dollar’s strongest gains occurred in the 10 days before and 15 days after congressional elections (0.65 and 0.46 percent, respectively) not only because they outperformed their benchmarks, but they were also in line with their median values.

It‘s final category shows the seven presidential elections had the opposite effect on the U.S. dollar. Here, the dollar posted its largest average gains in the longer-term (60- and 40- day) periods surrounding these elections. Also, the dollar’s presidentialelection- year benchmarks were quite bullish, which means not all the gains prior to and following this event are as noteworthy as they seem.

For example, the index’s 0.91-percent average gain in the 60 days before a presidential election was slightly below that period’s benchmark. Despite this caveat, the U.S. dollar rallied strongly starting in the third week after presidential elections, culminat ing in a 2.76-percent average gain by the 60th day following them.

They highlight the differences between the dollar’s average gains and losses around
presidential and mid-term congressional elections, respectively.

The dollar gained ground leading up to presidential elections, but actually lagged behind its benchmarks in four of the six periods. However, the index rose 1.07 percent, on average, in the 40 days preceding the event, beating its benchmark by 0.42 percent. The figure also clearly shows the dollar’s outstanding climb from the 10th day after election day. It reiterates the dollar’s fall in the 60-, 40- and 20-day periods before congressional elections.

While this downtrend reappeared between the 20th and 40th day after the event, the dollar posted gains and beat its benchmarks in the intervening seven periods (e.g., 15 days prior to and 20 days following it).