Finance
The dollar rises as the debate increases bets on Trump’s election win
(Bloomberg) — The dollar rose slowly in Asian trading as markets judged former President Donald Trump the victor in the first U.S. presidential debate.
Most read from Bloomberg
Bloomberg’s gauge of the U.S. currency climbed as much as 0.2% on Friday before stalling, with the index on track for a sixth consecutive weekly gain. President Joe Biden powered through early exchanges in the debate, a feat that could heighten concerns about his ability to defeat Trump in the November election.
Trump reiterated his pledge to impose 10% tariffs if he wins in November, a move that could put upward pressure on inflation, potentially delaying interest rate cuts that could weigh on the dollar.
“Markets have likely extrapolated the outcome of today’s debate to the actual election outcome in November,” said Carol Kong, a strategist at the Commonwealth Bank of Australia in Sydney. “Trump’s policies are likely to increase inflationary pressures and escalate trade tensions, supporting U.S. yields and the safe haven of the U.S. dollar.”
Asian currencies were mostly stable, while the Mexican peso fell almost 1% before paring losses to 0.2%. Treasury yields rose while U.S. stock futures posted modest gains later Friday, ahead of the Federal Reserve’s preferred inflation measure.
Although the debate got off to a slow start for Biden, it was a strong finish, Vice President Kamala Harris said. But PredictIt’s live betting trended in Trump’s favor. He is now believed to have a 58% chance of winning the November election, up from around 53% just before the debate began.
While the dollar could weaken if US consumer spending data shows some easing on Friday, the greenback is likely to remain supported in the coming week as investors brace for election risks in France and Britain, says Mahjabeen Zaman, head of FX research at Australia & New Zealand Banking. Group in Sydney.
Sentiment in Asian equities was largely upbeat, with most regional equity markets advancing during the debate. Chinese benchmarks pared early losses and exited technical correction territory as the lack of aggressive comments on China was seen as a positive surprise by traders. The Hang Seng China Enterprises Index rose as much as 0.8%.
It’s a “positive surprise for this part of the world, but only moderately so,” said Redmond Wong, market strategist at Saxo Capital Markets. The political consensus on dealing with China depends not only on the presidential candidates but also on Congress, he said, adding that there could be some escalation of tensions in the coming months.
The lack of aggressive Chinese comments was “probably a surprise, but anti-China is a united, bipartisan stance, so there’s probably not much to attack each other,” said Xin-Yao Ng, investment director at abrdn.
Most read from Bloomberg Businessweek
©2024 BloombergLP
