(Bloomberg) — The dollar fell as investors scaled back their bets on Donald Trump winning the U.S. presidential election after the latest set of polls showed no clear advantage for him. Oil rose after OPEC+ postponed a production increase.
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An index of the dollar fell the most in more than six weeks, with the US currency falling against major rivals such as the yen and Australian dollar. Government bond futures rose.
The moves came after a Des Moines Register poll showed Kamala Harris with a 47%-44% lead in Iowa — a state Trump has won in each of his previous elections. One element of the so-called Trump trade favors higher government bond yields and a stronger dollar. Still, other surveys show the two candidates are poised for a photo finish, with voters closely divided both nationally and across crucial swing states.
Yields on the dollar and 10-year government bonds had both reached their highest levels since July in recent weeks as investors stepped up their bets on a second Trump term. There are concerns that his support for looser fiscal policies and steep rates will widen the federal deficit and fuel inflation, undermining government bonds.
Shares rose in Asia, led by those in South Korea and Australia. U.S. stock futures rose slightly following Wall Street’s gains Friday, following robust gains from companies including Amazon.com and Intel Corp. Japanese markets are closed for a holiday, meaning there will be no government bond trading during Asian hours.
“It is basically impossible to predict the outcome at this point,” Homin Lee, senior macro strategist at Lombard Odier in Singapore, told Bloomberg TV. The best you can do is ‘wait for the event to occur and then make a reasonable momentum decision’.
In addition to the US elections, trading in the financial markets this week will also be determined by central bank decisions on interest rates for the US, UK and Australia, among others.
The Federal Reserve is expected to cut rates by 25 basis points on Thursday after the latest jobs data showed US employment rose at the slowest pace since 2020, while the unemployment rate remained low. Yet the figures were distorted by major hurricanes and a major strike.
In Australia, Westpac Banking Corp. its share buybacks increased to A$2 billion ($1.3 billion) and reported higher-than-expected profits. Stocks headed lower.