10 US states will vote in the primaries in “Super Tuesday”. So far, it’s still unclear who will win the nomination of the Republican party.
These contests can either pave the road for Romney’s nomination, or pave the road for Obama’s reelection. In both cases, it is likely to help the greenback.
As discussed in the quarterly report, certainty is the key for the dollar. The level of uncertainty is now lower regarding US politics.
Mainstream Scenarios
The improvement in the economy certainly supports Obama. In addition, the Republican contest has been more complicated than expected. The candidates have spent more money and words criticizing each other. This also helps Obama.
The mainstream scenario is that Mitt Romney will win the primaries. While he is the most electable candidate, his policies are not too different from Obama’s, especially regarding the economy and foreign policy.
Romney might pose a threat to a second term for Obama, but it isn’t likely to make a difference for the dollar.
Rick Santorum has surged on the expense of Newt Gingrich. Both lean to the conservative right wing. If Santorum makes big gains against Romney in Super Tuesday and eventually wins, it will be much easier for Obama to win, and the level of certainty will be even higher.
Ron Paul’s influence
The fourth candidate trailing behind is Ron Paul. He is certainly different, with a totally different approach to foreign policy. He is a very outspoken critic of the Fed and it’s QE policies.
If Ron Paul manages to hang on the race, his words against QE will continue echoing. QE has a very strong impact against the dollar, and the Federal Reserve isn’t deaf to criticism.
It doesn’t necessarily take victories for Ron Paul to make the difference. If the battle remains close between Romney and Santorum, there is a small chance that Republican party will continue the race until the convention.
Ron Paul and his delegates could be a key factor in determining the nominee and his criticism of the Fed will continue to be heard.
Nearly half of US states will have the primaries behind them after March 6th, and the picture will be clearer. Ohio seems to be the main battleground between Romney and Santorum.
This article is part of the special report about the Greek endgame and everything that rocks euro to dollar in March. You can download it by joining the newsletter in the form below, which appears on any article on Forex Crunch.