Dollar Weakens as US Polls Spur Trump Trade Unwind
The dollar fell against all its Group-of-10 peers and Treasury yields dropped after weekend US election polls spurred some traders to pare bets on a Donald Trump victory.
The Bloomberg Dollar Spot Index dropped as much as 0.7%, the most since August, before trimming declines. A Trump victory is seen as positive for the dollar as the former president’s fiscal and trade policies are perceived to be inflationary.
The unwinding of some elements of the “Trump Trade” came after a poll by the Des Moines Register showed Kamala Harris with a 47%-44% lead in Iowa — a state Trump won in 2016 and 2020. Still, Harris’ advantage across all of the surveys was within the margin of error, and a NBC News poll released Sunday showed the race deadlocked.
“The odds have retraced quite a bit of the moves seen in October across a range of markets,” Michael Wan, senior currency analyst at MUFG Bank Ltd., wrote in a note. “The Fed is likely to cut rates by 25bps in its upcoming meeting this week, but the result of the US election could matter materially for how the Fed thinks about the longer-term path beyond 2024”.
USD/JPY fell as much as 0.9% to 151.60 Monday after rising in each of the the past five weeks.
AUD/USD rose 0.4% to 0.6588; NZD/USD gained 0.4% to 0.5987.
The US 10-year yield slipped 7 basis points to 4.32%.
Source : Bloomberg