Global Markets Watch: US Election Frenzy Boosts Dollar and Bitcoin
As the world counts down to the US presidential election in two weeks, global markets are witnessing a surge in the dollar and a remarkable comeback for cryptocurrency bitcoin. The greenback is expected to continue its upward trend, fueled by rising odds of former President Donald Trump’s re-election.
Dollar Strengthens Amidst Election Uncertainty
The dollar index, which measures the currency against major rivals, stood at 103.45, having logged 0.55% gains for the week. This upswing can be attributed to Trump’s proposed tariff and tax policies, which are likely to keep US interest rates high and undermine currencies of trading partners. According to Brad Bechtel, global head of FX at Jefferies, rising real interest rates are also contributing to the dollar’s strength, particularly against the euro, Swiss franc, and Mexican peso.
Bitcoin Rallies on Softer Regulation Prospects
Meanwhile, bitcoin has hit a three-month high, surging 18% since October 10. The cryptocurrency’s lift can be attributed to Trump’s improving prospects, as his administration is seen as taking a softer line on cryptocurrency regulation. With a current value of $69,400, bitcoin is poised to continue its upward trajectory.
Election Risk Takes Center Stage
With no major economic events scheduled for this week, market focus will shift to corporate earnings and US election risk. As Chris Weston, head of research at Pepperstone, noted, “With just 15 days to go until the US election, traders need to decide if now is the right time to start placing election trades with greater conviction.” Weston suggests that the clearest way to express the Trump tariff risk is to be long dollars versus the euro, Swiss franc, and Mexican peso.
Currency Markets React
The yen fell 0.1% to 149.32 per dollar, while the euro stood flat at $1.0866. Sterling was also flat, hovering around $1.3045. The Mexican peso, however, took a hit, falling 3% last week. As the US election draws near, currency markets are bracing for potential volatility, with the dollar expected to remain a safe-haven asset.
What’s Next?
In the run-up to the US presidential election, markets will continue to watch for signs of election risk and potential policy changes. As Weston advises, traders should exercise caution and consider hedging their portfolio risks. With the dollar and bitcoin on the rise, investors will be keeping a close eye on these assets as the election outcome unfolds.
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