Currency moves in major markets last week were driven by the ECB’s dovish rate cut and strong U.S. data that pushed out expectations for how fast U.S. rates can drop, especially if Trump wins the presidency
Crypto currency bitcoin hit a three-month high in early trading on Monday and the dollar appeared set to extend its gains in markets counting down to the U.S. presidential election in two weeks.
Election polls that show rising odds of former President Donald Trump winning the November 5 election are boosting the dollar, since his proposed tariff and tax policies are seen as likely to keep U.S. interest rates high and undermine currencies of trading partners.
Currency moves in major markets last week were driven by the ECB’s dovish rate cut and strong U.S. data that pushed out expectations for how fast U.S. rates can drop, especially if Trump wins the presidency.
The yen was down almost 0.2% at 149.26 per dollar but staying on the stronger side of 150 per dollar after having crossed that level briefly last week for the first time since early August.
The dollar index was at 103.49. It declined 0.3% on Friday as risk appetite picked up broadly across markets after China announced more details of its broad stimulus package, but logged 0.55% gains for the week. The euro stood flat at $1.0862 and sterling was also flat around $1.3041.
Bitcoin got a lift from Trump’s improving prospects since his administration is seen as taking a softer line on crypto currency regulation. It was up 0.2% at $68,869, down from a high of $69,487 that took its gains since October 10 to 18%.
With no major economic events due this week, market focus will be on corporate earnings and U.S. election risk, and possibly a rise in costs to hedge dollar and other portfolio risks, head of research at Pepperstone Chris Weston, said in a note.
With just 15 days to go until the U.S. election, traders need to decide if now is the right time to start placing election trades with greater conviction, he said.
The clearest way to express the Trump tariff risk was to be long dollars versus the euro, Swiss franc and Mexican peso, he added.
