The Dollar Rises as Investors Bet on Trump Victory After Assassination Attempt
In a surprising turn of events, the dollar has surged and Treasury futures have fallen as investors increasingly believe that Donald Trump will win the US presidential election following an assassination attempt. The greenback has strengthened against all other Group-of-10 currencies, while the Mexican peso has slipped and Bitcoin has reached its highest level in nearly two weeks.
The market reaction reflects a growing confidence in the prospect of Trump’s return to the White House, which is seen as potentially leading to looser fiscal policy and higher tariffs. These policies are generally viewed as favorable for the dollar and negative for Treasuries.
European equity futures are trading lower, while S&P 500 contracts are pointing to a higher US open. Stocks in Asia have slipped, with Chinese stocks in Hong Kong extending losses after data showed weakening momentum in the world’s second-largest economy.
“With markets pricing in a greater possibility of Trump 2.0, the US dollar will likely get some tailwinds while the Mexican peso and Chinese yuan could suffer,” said Charu Chanana, market strategist at Saxo Capital Markets. “Trump trades could be back in focus.”
Shares of South Korean defense and nuclear energy firms have climbed, and a Chinese company with a name that sounds like “Trump Wins Big” has seen its stock soar. Bitcoin has also topped $62,000 in response to the former president’s pro-crypto stance.
While the market is currently betting on a Trump victory, there is still plenty of time for surprises in the US election campaign. Monday’s action follows a significant week in the Federal Reserve’s fight against inflation, with economic reports bolstering expectations of two rate cuts in 2024.
Traders are also closely watching the Third Plenum, a meeting of China’s top leadership, for potential policy support after the country’s economy grew at its slowest pace in five quarters. Metals like iron ore and copper have risen on expectations of stimulus measures from China.
Overall, the market is bracing for potential changes in policy and trade dynamics under a Trump administration, leading to shifts in currencies, stocks, and commodities. The coming weeks are sure to be filled with volatility as investors react to unfolding political and economic developments.
