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 upcoming U.S. presidential election.
Trump, 78, was at a campaign rally in Pennsylvania over the weekend when a shot rang out, hitting him in the right ear and leaving a streak of blood on his face. The Trump campaign said he was in good condition.
Investors responded by narrowing the chances of a Trump victory in November, which resulted in the dollar and Treasury yields rising along with cryptocurrencies on Monday.
“Sympathy votes could increase Trump’s chances of victory as many of his supporters will feel the need to turn up to the polls in November and vote for him,” said Basu Menon, managing director of investment strategy at OCBC.
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.
The euro fell 0.2% against the dollar to $1.0888, while the pound was down 0.13% to $1.2973.
Similarly, the US dollar rose 0.48% against the Norwegian krone and 0.35% against the Swedish krona.
“If the U.S. enters ‘Trump 2.0,’ the U.S. dollar will be supported and likely to strengthen further,” said Vishnu Varathan, chief Asia (ex-Japan) economist at Mizuho Bank.
“This is certainly less to do with the undeniable appeal of the US dollar and more to do with the weakening of other major currencies due to the machinations of hostile US trade and geopolitical posturing.”
Meanwhile, yields on long-term U.S. government bonds rose on expectations that a Trump victory would lead to policies that would increase government debt and stimulate inflation.
The benchmark 10-year Treasury yield was last up about 3 basis points to 4.2158%. [US/]
Meanwhile, cryptocurrency prices surged, with Bitcoin up about 5% to $62,997 and Ether up nearly 6% to $3,368.14.
President Trump has described himself as a crypto advocate but has not provided details of his proposed cryptocurrency policies.
Elsewhere, the Australian dollar fell 0.1% to $0.6777, while the New Zealand dollar was down 0.43% to $0.6092.
The dollar index was little changed at 104.21.
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.
The Chinese yuan fell 0.16% from the previous day in the domestic market, trading at 7.2626 yuan 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 157.88 yen to the dollar, not far from the 157.30 yen high it hit on Friday, its highest level in nearly 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.
(Reporting by Ray Wee, Vidya Ranganathan and Suzanne Magee; Editing by Stephen Coates and Michael Perry)
