SINGAPORE (Reuters) – Cryptocurrency bitcoin hit a three-month high in early trading in Asia on Monday and the dollar looked set to extend its gains in markets counting down to the U.S. presidential election in two weeks.
Election polls show former President Donald Trump is increasingly likely to win the Nov. 5 election, boosting the dollar as his proposed tariff and tax policies are believed to keep U.S. interest rates high and the currencies of trading partners undermine.
Currency moves in major markets over the past week were driven by the European Central Bank’s accommodative rate cut and strong U.S. data that raised expectations about how quickly U.S. yields could fall, especially if Trump becomes president.
The yen fell 0.1% to 149.32 per dollar, remaining on the stronger side of 150 per dollar, after briefly breaching that level last week for the first time since early August.
The dollar index measure against major rivals was 103.45. Yields fell 0.3% on Friday as risk appetite generally rose in markets after China announced more details of its broad stimulus package, but rose 0.55% this week. The euro was steady at $1.0866 and sterling was also flat at around $1.3045.
Bitcoin got a boost from Trump’s improving prospects as his administration is seen taking a softer stance on cryptocurrency regulation. The stock last rose 0.8% to $69,400 and is up 18% since October 10.
With no major economic events happening this week, the market’s focus will be on corporate earnings and US election risk, and possibly a rise in the cost of hedging dollar and other portfolio risks, says Chris Weston, head research at the Australian online broker Pepperstone. remark.
“With just 15 days to go until the US elections, traders must decide whether now is the right time to place election trades with more conviction,” Weston said.
The clearest way to express Trump’s tariff risk was to use long dollars against the euro, Swiss franc and Mexican peso, he said.
Brad Bechtel, global head of FX at Jefferies, also noted that rising real rates helped the dollar, especially against these three currencies.
“We expect this trend to continue immediately into the election and, if Trump wins, likely well after the election,” Bechtel wrote.
Last week the yen fell by 0.3%, the euro by 0.6%, the pound remained stable and the dollar index rose by 0.55%. The Mexican peso fell 3%.
The euro has fallen more than 3% in three weeks, breaking through the 200-day moving average and near a 2.5-month low.
(Editing by Sam Holmes)
