The dollar rose broadly on Monday 15/07 and cryptocurrencies jumped as negotiations for a Donald Trump victory in the upcoming US elections gained momentum in the wake of an assassination attempt on the former US president.
Trading was subdued in the Asian session as Japan left for a public holiday, although news of Trump’s shooting dominated the market mood and investors played down the odds of a Trump victory in November.
The assassination attempt probably adds to Trump’s “reputation for strength”, said Jack Ablin, chief investment officer at Cresset Capital.
Online betting site PredictIT puts the Republicans’ victory at 66 cents, up from 60 cents on Friday 12 July, and the Democrats’ at 38 cents. The current odds indicate that the Republicans are twice as likely to win the elections as the Democrats.
This caused the dollar to rise broadly, which left the euro down 0.14 per cent to $1.0895, while sterling fell 0.09 per cent to $1.2978.
US Treasury bonds were not traded in Asia on Monday 15/07 due to the holiday in Japan, but 10-year Treasury futures fell, indicating that yields will rise when cash trading begins later in the day. Bond yields move inversely to prices.
“The market’s reaction function to a Trump presidency was characterised by a stronger US dollar and a steepening of the US Treasury bond curve, so we may see some of that next week if his election chances are assessed to have improved further after this incident,” said Rong Ren Goh, a portfolio manager at Eastspring Investments.
Crypto prices also rose in anticipation of a Trump victory, with bitcoin climbing 9 per cent to $62,760. Ether jumped more than 7 per cent to $3,336.80.
Trump has presented himself as a champion of cryptocurrency, although he has offered no details on his proposed crypto policy.
In other currencies, the Australian dollar decreased 0.13 per cent to $0.6775, while the New Zealand dollar fell 0.3 per cent to $0.6100.
The dollar index was little changed at 104.20.
Under Trump’s presidency, market analysts expect a more aggressive trade policy, less regulation and more flexible regulations on climate change.
Investors also expect an extension of corporate and personal tax cuts that expire next year, fuelling concerns about rising budget deficits under Trump.
Still struggling
Headlines from China also caught investors’ attention on Monday 15/07, as data showed that the world’s second largest economy grew much more slowly than expected in the second quarter, due to a prolonged property recession and job insecurity that squeezed domestic demand.
Separate figures released earlier in the day showed that new home prices in China fell at the fastest pace in nine years in June, with the sector struggling to find a bottom despite government support measures to control oversupply and boost confidence.
The Chinese yuan barely reacted to the data and only slightly extended its losses since the start of the session, last trading 0.13 per cent lower at 7.2602 per dollar on the onshore market .
“In net terms, it’s a negative result. It shows that the growth momentum of the second quarter seems to be weakening,” said Alvin Tan, head of Asian currency strategy at RBC Capital Markets.
“The weakening momentum in the second quarter implies that we will need more support to get the economy to the 5 per cent target for the full year.
The meeting of China’s top officials, which takes place once every five years and usually prompts policy changes, began on Monday 15 July and the four-day plenary will be looking at measures to support the uneven recovery of the world’s second largest economy.
In the rest of the world, the yen reversed some of its gains from the end of last week and last stood at 157.95 per dollar, although it wasn’t too far off a near one-month high of 157.30 reached on Friday 12 July.
Tokyo is believed to have intervened in the market to prop up the Japanese currency last week in the wake of a colder-than-expected US inflation report, with data from the Bank of Japan suggesting that the authorities may have spent up to 3.57 trillion yen (US$22.4 billion) to do so on Thursday.
Semanário Económico
