Markets
Dollar rises on cryptocurrency as markets turn in favor of a Trump victory
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.
Trump, 78, was holding a campaign rally in Pennsylvania over the weekend when shots rang out, striking his right ear and leaving blood smeared across his face. His campaign said he was OK.
Investors responded by downplaying the chances of a Trump victory in November, which in turn sent the dollar and U.S. Treasury yields higher on Monday, along with cryptocurrencies.
“Sympathy votes could increase the chances of a Trump victory as more of his supporters may feel the need to turn out to vote for him in November,” said Vasu Menon, managing director of investment strategy at OCBC.
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.
Against the dollar, the euro fell 0.2% to $1.0888, while the pound sterling fell 0.13% to $1.2973.
The dollar also rose 0.48% against the Norwegian krone and lastly 0.35% against the Swedish krona.
“There is likely to be a bias towards a supported, possibly even stronger, dollar if the US moves towards Trump 2.0,” said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank.
“This is arguably due more to the weakening of other major currencies by an antagonistic US trade conspiracy and geopolitical posturing than to the undisputed allure of the US dollar.”
Meanwhile, long-term U.S. bond yields rose on expectations that a Trump victory would result in policies that would increase government debt and spur inflation.
The yield on the benchmark 10-year Treasury note rose about three basis points to 4.2158%. [US/]
Elsewhere, cryptocurrency prices soared, with bitcoin rising about 5% to $62,997. Ether jumped nearly 6% to $3,368.14.
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 0.1% to $0.6777, while the New Zealand dollar fell 0.43% to $0.6092.
The dollar index was little changed at 104.21.
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.
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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 Chinese yuan fell 0.16% to 7.2626 per dollar in onshore trading.
“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 157.88 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.
(Reporting by Rae Wee, Vidya Ranganathan and Suzanne McGee; Editing by Stephen Coates and Michael Perry)