By Ray Wee
SINGAPORE (Reuters) – The dollar rose broadly on Monday and cryptocurrencies also surged as the assassination attempt on former U.S. President Donald Trump strengthened expectations that he would win the next U.S. election.
Trading was thin in Asian markets due to a public holiday in Japan, but news of the shooting of President Trump dominated the market mood, leaving investors with less hope of a Trump victory in November.
Jack Ablin, chief investment officer at Cresset Capital, said the assassination attempt would likely bolster Trump’s “reputation of strength.”
Online betting site PredictIT raised the odds of a Republican victory to 66 cents from 60 cents on Friday, and the odds of a Democratic victory to 38 cents. Under the current odds, Republicans are twice as likely to win the election as Democrats.
This led to a broad rise in the dollar, with the euro down 0.14% to $1.0895 and the pound down 0.09% to $1.2978.
There was no physical Treasury trading in Asia on Monday due to a Japanese holiday, but 10-year Treasury note futures were slightly lower, suggesting yields will rise when spot trading begins later in the day. Bond yields move inversely to prices.
“The market reaction to Trump’s inauguration has been marked by a stronger U.S. dollar and a steeper Treasury yield curve, and we may see more of that next week if this incident makes Trump’s chances of winning appear even stronger,” said Long Len Goh, portfolio manager at Eastspring Investments.
Cryptocurrency prices also surged in anticipation of a Trump victory, with Bitcoin up 9% to $62,760 and Ether up more than 7% to $3,336.80.
President Trump has described himself as a crypto advocate but has not provided details of his proposed cryptocurrency policies.
Elsewhere, the Australian dollar fell 0.13% to $0.6775, while the New Zealand dollar was down 0.3% to $0.6100.
It remained almost unchanged at 104.20.
Market analysts expect more hawkish trade policies, fewer regulations and relaxed climate change restrictions under President Trump.
Investors are also betting on an extension of corporate and personal tax cuts that are due to expire next year, raising concerns about widening budget deficits under the Trump administration.
Still struggling
News from China also captured investors’ attention on Monday. Data showed the world’s second-largest economy grew much slower than expected in the second quarter, weighed down by a prolonged property market slump and employment worries that weighed on domestic demand.
Separate data released on the same day showed new home prices in China fell at the fastest pace in nine years in June, with the battered housing sector struggling to find a bottom despite government support measures to curb oversupply and boost confidence.
Bitcoin barely reacted to the data, extending losses from earlier in the session slightly in onshore markets, last trading down 0.13% to 7.2602 per dollar.
“It’s an overall negative result, suggesting that growth momentum in the second quarter appears to be weakening,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
“Weakening momentum in the second quarter suggests further support will be needed to steer the economy towards the 5 percent target for the full year.”
China’s once-every-five-years gathering of top officials to trigger policy changes kicks off on Monday, with four days of plenary sessions focusing on measures to shore up a fragile recovery in the world’s second-largest economy.
Meanwhile, the yen partially reversed gains from the end of last week to trade at 157.95 yen to the dollar, but remained not far from the 157.30 yen hit on Friday, the highest level in about a month.
Tokyo is seen to have intervened in markets to support the weakening Japanese yen following a weaker-than-expected U.S. inflation report last week, and Bank of Japan data showed authorities may have spent up to 3.57 trillion yen ($22.4 billion) on intervention on Thursday.
