Written by Lei Wee
SINGAPORE (Reuters) – After a cautious start to the week in financial markets, currency trends were in the spotlight on Monday ahead of a busy week ahead of the decisive U.S. presidential election.
This week will also provide investors with a global monetary policy catalyst with interest rate decisions by the Federal Reserve, Bank of England (BoE), Reserve Bank of Australia (RBA), Riksbank and Norges Bank.
The Standing Committee of China’s National People’s Congress (NPC) will convene from November 4 to November 8, and will focus on further details of a number of recently announced economic stimulus measures.
Much of the early action was in currencies, with the dollar falling sharply, although trading was light in Asia due to Japan’s holiday.
Against the yen, the dollar fell 0.75% to $151.82, while the euro rose 0.62% to $1.0901.
In the domestic market, the Australian dollar rose 0.76% and the Chinese yuan rose 0.46%.
Dealers say the drop in the dollar is related to a well-received poll showing Democratic candidate Kamala Harris gaining an unexpected 3-point lead in Iowa, thanks largely to her popularity with female voters. He said it was possible.
Still, polls ahead of Tuesday’s election showed Harris and Republican candidate Donald Trump remaining virtually tied, and the winner may not be known for several days after polls close.
“At the beginning of last week, we were pricing in a 48% chance of a Red Army victory in a landslide, but this morning, according to Polymarket, that has dropped to around 36%. That means the probability of a landslide victory for the Republicans has eased significantly. “…Democrats have certainly closed the gap,” said Tony Sycamore, market analyst at IG.
“As a result, we will see some of the dollar ‘Trump trade’ start to come out of the market.”
Harris is seen as a candidate to remain in office, although analysts say Trump’s immigration, tax cuts and tariff policies will put upward pressure on inflation, bond yields and the dollar.
Spot trading in US Treasuries was suspended in Asia due to a holiday in Japan, but futures rose 10 ticks. (we/)
MSCI’s broadest index of Asia-Pacific stocks outside Japan rose 0.6%, recovering from Friday’s slide to a five-week low.
U.S. stock futures reversed early losses and rose in the final session, with Nasdaq futures up 0.42% and S&P 500 futures up 0.27%.
Eurostock 50 futures were flat. FTSE futures were down 0.2%.
China focuses on interest rates
Besides the US elections, China’s National People’s Congress Standing Committee meeting will also attract investors’ attention.
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