06/11/2024 Daily Reports
Election day drama is already shaking up markets! Here’s a quick breakdown of what’s happening as the dollar climbs and currencies around the world react:
- Dollar Rallies to July Highs! Early results are showing Trump leading in crucial swing states like Georgia and North Carolina, pushing the dollar up by more than 1%.
- Global Currencies Drop in Response The euro, yen, Australian dollar, and Swiss franc all took hits, with the Mexican peso down nearly 2%. Early reactions reflect fears of trade policy shifts under a potential Trump return.
- Trump Trades Surge as Odds Shift Speculative traders and hedge funds have been positioning for a dollar rally, particularly due to Trump’s stance on tariffs and tax cuts. Expectations of inflation pressure are causing excitement across the board.
- Increased Market Volatility With a closely contested race, hedge funds are making bold moves in “Trump trades,” betting on a strengthening dollar and guarding against the impact of high tariffs.
- Huge Bullish Bets on the Dollar As of late October, over $17 billion in bullish positions were held on the dollar, showing market confidence in safe-haven assets through election turbulence.
Could we see a sustained dollar rally if Trump takes the lead? Or will the markets reverse course if Harris pulls ahead?
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Markets Surge on Trump Election Momentum: Dollar and Treasury Yields Jump Amid Investor Optimism
Markets around the world rallied as trading activity surged, reflecting investors’ bets on Donald Trump’s rising chances in the US presidential race.
S&P 500 futures climbed by 1.2%, 10-year Treasury yields hit a four-month high at 4.39%, and Bitcoin reached a record high.
The dollar rose sharply, posting its strongest gains since February 2023, while smaller US-focused companies, as reflected in a 2.5% gain in Russell 2000 futures, benefited from potential Trump policy advantages.
The Mexican peso, yen, and euro fell, with the Bloomberg Dollar Spot Index up by 1.1%.
The potential for a Trump presidency, seen as favorable to pro-growth policies, spurred stocks and Treasury yields higher, while investors also anticipated gains for crypto due to expectations of a lighter regulatory stance.
Wall Street forecasts, including from Goldman Sachs and Morgan Stanley, suggest potential market volatility based on the election outcome, with Republicans and cyclical stocks potentially benefiting.
However, a Democratic win could shift momentum to renewable energy and tariff-sensitive sectors, underscoring the mixed sentiments as election night unfolds.
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Dollar Declines as US Election Uncertainty Grows; Oil Gains on OPEC+ Delay
The dollar fell significantly as investors scaled back bets on a Trump election victory, following a poll indicating a slight lead for Kamala Harris in Iowa.
The US currency dropped against key currencies like the yen and euro, while Treasury futures rose amid uncertainty around the election.
Previously, the dollar and Treasury yields had strengthened on expectations of Trump’s fiscal policies, which could potentially deepen the deficit and fuel inflation.
Oil prices rose over 1% after OPEC+ postponed its planned December production increase.
Meanwhile, Asian shares rose, and Wall Street stock futures gained following strong earnings reports from Amazon and Intel.
This week, markets are set to respond to central bank meetings in the US, UK, and Australia, where the Federal Reserve is expected to cut rates amid sluggish job growth influenced by strikes and hurricanes.
