In early Asian trading today, Bitcoin reached a three-month high and the US dollar continued to strengthen as markets anticipated the upcoming US presidential election. With the election just two weeks away, rising approval ratings for former President Donald Trump have impacted currency markets.
Trump’s potential re-election is seen as a factor that could keep interest rates high in the United States due to his tariff and tax policies, which could have a negative impact on the currencies of America’s trading partners.
Currency movements last week were influenced by the European Central Bank’s decision to cut interest rates and strong US economic data, which has shifted expectations about the pace of potential US interest rate cuts, especially if Trump secures the presidency.
The Japanese yen fell slightly 0.1% to trade at 149.32 yen to the dollar, remaining strong above 150 yen to the dollar after briefly crossing the 150 yen mark last week for the first time since early August. The dollar index, which compares the greenback to major currencies, stood at 103.45.
The index rose 0.55% on a weekly basis, despite falling 0.3% on Friday as risk appetite rose following China’s stimulus announcement. The euro was unchanged at $1.0866 and the British pound was steady near $1.3045.
Bitcoin’s value has risen on Trump’s improving election prospects, as his administration is perceived to take a more lenient approach to cryptocurrency regulation. The digital currency rose 0.8% to trade at $69,400, up 18% since Oct. 10.
With no significant economic events scheduled for this week, market focus is expected to shift to corporate earnings, US election risks and the potential for higher hedging costs for dollar and other portfolio risks. The head of research at Australian online broker Pepperstone suggested traders should consider whether it is time to make election-related trades with more confidence.
Weston noted that one of the clearest strategies to counter Trump’s tariff risks is to favor the dollar against the euro, Swiss franc and Mexican peso. Jefferies’ global head of FX also noted that the dollar’s strength, especially against these three currencies, was partly due to rising real interest rates. Bechtel expects this trend to continue leading up to the election and beyond if Trump wins.
Last week the yen fell 0.3%, the euro fell 0.6%, the British pound was unchanged and the dollar index rose 0.55%. The Mexican peso fell 3%. The euro has fallen more than 3% over the past three weeks, breaking its 200-day moving average and nearing a two-and-a-half-month low.
Reuters contributed to this article.
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