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Dollar rises, cryptocurrencies jump as markets pivot to Trump victory By Reuters
By Rae Wee
SINGAPORE (Reuters) – The dollar rallied broadly on Monday and cryptocurrencies jumped as trading on a Donald Trump victory in the next U.S. election gained momentum following the attempted assassination of the former U.S. president.
Trading thinned in the Asian session, with Japan on holiday, even as news of Trump’s shooting dominated market sentiment and led investors to play down the odds of a Trump victory in November.
The assassination attempt likely bolsters Trump’s “reputation for toughness,” said Jack Ablin, chief investment officer at Cresset Capital.
Online betting site PredictIT has a Republican win at 66 cents, up from 60 cents on Friday, with Democrats at 38 cents. Current odds suggest Republicans are twice as likely to win the election as Democrats.
This caused the dollar to rise overall, causing the euro to lose 0.14% to $1.0895, while the pound fell 0.09% to $1.2978.
Cash U.S. Treasuries were not traded in Asia on Monday due to the Japanese holiday, but 10-year Treasury futures were down slightly, indicating yields will rise when cash trading begins later in the day. Bond yields move inversely to prices.
“The market reaction to Trump’s presidency has been characterized by a stronger US dollar and a steepening of the US Treasury curve, so we may see something similar next week if we assess that his election odds have improved further after this incident,” said Rong Ren Goh, portfolio manager at Eastspring Investments.
Cryptocurrency prices similarly surged in anticipation of a Trump victory, with bitcoin rising 9% to $62,760. Ether jumped more than 7% to $3,336.80.
Trump has portrayed himself as a supporter of cryptocurrencies, although he has not provided specific details on his proposed policy on the matter.
Elsewhere, the Australian dollar fell 0.13% to $0.6775, while the New Zealand dollar fell 0.3% to $0.6100.
The value remained almost unchanged at 104.20.
Under Trump, market analysts expect a tighter trade policy, fewer regulations and looser climate change regulations.
Investors are also anticipating an extension of corporate and individual tax cuts that expire next year, fueling concerns about a rising budget deficit under Trump.
STILL IN THE LOTTERY
Stocks from China also caught investors’ attention on Monday, as data showed the world’s second-largest economy grew much more slowly than expected in the second quarter, weighed down by a prolonged housing crisis and job insecurity that curbed domestic demand.
Other data released earlier showed that new home prices in China fell at the fastest pace in nine years in June, with the struggling sector struggling to find a bottom despite government support measures aimed at controlling oversupply and boosting confidence.
The company reacted little to the data and only slightly extended losses posted earlier in the session, falling 0.13% to 7.2602 per dollar onshore.
“In net terms, it’s a negative result. It shows that the growth momentum from the second quarter appears to be weakening,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets.
“The weakening of momentum in the second quarter implies in some ways that we will need more support to bring the economy to the 5% target for the full year.”
The once-every-five-year plenary meeting of top Chinese officials, usually ushering in policy changes, began on Monday, with experts expected to watch the four-day meeting as they brainstorm measures to support the uneven recovery of the world’s second-largest economy.
Elsewhere, the yen reversed some of its gains from late last week and settled at 157.95 per dollar, though still not far from Friday’s near-one-month high of 157.30.
Tokyo is thought to have intervened in the market last week to support the struggling Japanese currency, following a weaker-than-expected US inflation report; Bank of Japan data suggests the authorities may have spent as much as 3.57 trillion yen ($22.4 billion) to do so on Thursday.