Markets
Dollar rises, cryptocurrency jumps as markets turn in favor of Trump victory By Reuters
By Rae Wee
SINGAPORE (Reuters) – The dollar rallied broadly on Monday and cryptocurrencies jumped as talk of Donald Trump winning the upcoming U.S. election gained momentum following an assassination attempt on the former U.S. president.
Trading was muted in Asia due to a holiday in Japan, although news of Trump’s shooting dominated market sentiment and prompted investors to downplay the chances of a Trump victory in November.
The assassination attempt likely enhances Trump’s “reputation for strength,” said Jack Ablin, chief investment officer at Cresset Capital.
Online betting site PredictIT has the Republicans winning at 66 cents, up from 60 cents on Friday, with the Democrats at 38 cents. Current odds indicate that Republicans are twice as likely to win the election as Democrats.
That sent the dollar broadly higher, leaving the euro down 0.14% to $1.0895, while the pound sterling fell 0.12% to $1.2975.
Spot U.S. Treasuries were not trading in Asia on Monday due to a holiday in Japan, but 10-year Treasury futures fell, indicating yields will rise when spot trading begins later in the day. Bond yields move inversely to prices.
“The market’s reaction function to Trump’s presidency has been characterized by a stronger US dollar and a steepening of the US Treasury yield curve, so we may see some of that next week if his election chances are assessed as having improved further after this incident,” said Rong Ren Goh, portfolio manager at Eastspring Investments.
Cryptocurrency prices also surged in anticipation of Trump’s victory, with bitcoin rising 9% to $62,766. Ether jumped more than 7% to $3,331.60.
Trump has presented himself as a supporter of cryptocurrencies, although he has not offered details about his proposed cryptocurrency policy.
In other currencies, the Australian dollar fell 0.08% to $0.6778, while the New Zealand dollar fell 0.29% to $0.6100.
There was little change at 104.20.
Under a Trump presidency, market analysts expect more aggressive trade policy, less regulation and more flexible climate change regulations.
Investors are also expecting an extension of corporate and personal tax cuts that expire next year, fueling concerns about widening budget deficits under the Trump administration.
STILL FIGHTING
Headlines from China also grabbed investors’ attention on Monday as data showed the world’s second-largest economy grew much more slowly than expected in the second quarter, weighed down by a prolonged housing slump and job insecurity that dampened domestic demand.
Separate data released earlier in the day showed new home prices in China fell at the fastest pace in nine years in June, with the battered sector struggling to find a bottom despite government support measures to control oversupply and bolster confidence.
The company barely reacted to the data and only slightly extended its losses from earlier in the session, falling 0.14% to 7.2609 per dollar in the onshore market.
“Overall, it’s a negative result. It shows that the growth momentum from the second quarter appears to be weakening,” said Alvin Tan, head of Asia currency strategy at RBC Capital Markets.
“The weakening pace in the second quarter suggests we will need more support to get the economy to the 5% target for the full year.”
China’s five-yearly meeting of top officials, which usually marks the start of policy changes, began on Monday and the four-day plenum will be watched for measures to support the uneven recovery of the world’s second-largest economy.
Elsewhere, the yen reversed some of its gains from late last week and was last at 157.97 per dollar, although it was not far from a one-month high of 157.30 hit on Friday.
Tokyo is widely believed to have intervened in the market to support the weakening Japanese currency last week following a cooler-than-expected U.S. inflation report, with Bank of Japan data suggesting authorities may have spent as much as 3.57 trillion yen ($22.4 billion) to do so on Thursday.
Analysts said Monday’s holiday in Japan could create ideal conditions for authorities to strike again, given liquidity shortages similar to those seen during intervention rounds in April and May.
“To get more ‘bang for the buck’, FX intervention in calm conditions or after the release of weaker US economic data seems a sensible move,” said Jane Foley, head of FX strategy at Rabobank.
“The intervention this spring indicated that the MOF is very prepared to act outside of normal Tokyo trading hours.”