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World
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FOREX-Dollar buoyant, crypto jumps as markets turn in favour of a Trump victory
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FOREX-Dollar buoyant, crypto jumps as markets turn in favour of a Trump victory
Jul 14, 2024 9:21 PM

(Updates prices at 0345 GMT)

By Rae Wee

SINGAPORE, July 15 (Reuters) - The dollar rose broadly

on Monday and cryptocurrencies jumped as trades for a victory by

Donald Trump in the upcoming U.S. elections gathered steam in

the wake of an attempted assassination of the former U.S.

President.

Trading was thinned in Asia with Japan out for a holiday,

though news of the Trump shooting dominated the market mood and

had investors narrowing the odds of a Trump victory come

November.

The attempted assassination probably enhances Trump's

"reputation for strength", said Jack Ablin, chief investment

officer at Cresset Capital.

Online betting site PredictIT has a Republican win at 66

cents, from 60 cents on Friday, with the Democrats at 38 cents.

The current odds indicate that Republicans are twice as likely

to win the election as Democrats.

That sent the dollar rising broadly, which left the euro

easing 0.14% to $1.0895, while sterling fell

0.12% to $1.2975.

Cash U.S. Treasuries were untraded in Asia on Monday

owing to the Japan holiday, but 10-year Treasury futures

edged lower, indicating yields will rise when cash trading

begins later in the day. Bond yields move inversely to prices.

"The market reaction function to a Trump presidency has been

characterised by a stronger U.S. dollar and a steepening of the

U.S. Treasuries curve, so we might observe some of that this

coming week if his election odds are assessed to have further

improved following this incident," said Rong Ren Goh, a

portfolio manager at Eastspring Investments.

Crypto prices similarly surged in anticipation of a Trump

win, with bitcoin last up 9% at $62,766. Ether

jumped more than 7% to $3,331.60.

Trump has

presented himself

as a champion for cryptocurrency, although he has not

offered specifics on his

proposed crypto policy

.

In other currencies, the Australian dollar

eased 0.08% to $0.6778, while the New Zealand dollar

slid 0.29% to $0.6100.

The dollar index was little changed at 104.20.

Under a Trump presidency, market analysts expect a more

hawkish trade policy, less regulation and looser climate change

regulations.

Investors also expect an extension of corporate and personal

tax cuts expiring next year, fuelling concerns about rising

budget deficits under Trump.

STILL STRUGGLING

Headlines from China also grabbed investors' attention on

Monday, as data showed the world's second-largest economy grew

much slower than expected in the second quarter, weighed down by

a protracted property downturn and as job insecurity squeezed

domestic demand.

Separate figures released earlier in the day showed China's

new home prices fell at the fastest pace in nine years in June,

with the battered sector struggling to find a bottom despite

government support measures to control oversupply and bolster

confidence.

The Chinese yuan hardly reacted to the data and only

slightly extended its losses from earlier in the session to last

trade 0.14% lower at 7.2609 per dollar in the onshore market

.

"On net, it's a negative outcome. It does show that the

second-quarter growth momentum appears to be weakening," said

Alvin Tan, head of Asia FX strategy at RBC Capital Markets.

"The second-quarter momentum weakening kind of implies that

we'll need more support to get the economy to the 5% target for

the whole year."

China's once-in-five-year gathering of top officials, which

usually ushers in policy changes, kicked off on Monday and the

four-day plenum will be watched for measures to support the

patchy recovery in the world's second-largest economy.

Elsewhere, the yen reversed some of its gains from

late last week and last stood at 157.97 per dollar, though

remained not too far from a roughly one-month high of 157.30 hit

on Friday.

Tokyo was thought to have intervened in the market to

prop up the battered Japanese currency last week in the wake of

a cooler-than-expected U.S. inflation report, with Bank of Japan

data suggesting that authorities may have spent up to 3.57

trillion yen ($22.4 billion) to do so on Thursday.

Analysts said Monday's holiday in Japan could make for ideal

conditions for authorities to strike again given thin liquidity,

similar to that of the April-May rounds of intervention.

"In order to make more 'bang for their buck', FX

intervention in quiet conditions or after the release of softer

U.S. economic data seems like a sensible move," said Jane Foley,

head of FX strategy at Rabobank.

"The intervention that was carried out this spring,

indicated that the MOF is very prepared to act outside normal

Tokyo trading hours."

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