Dollar Soars as Yen Weakens

15 Jul 2024 , 08:36 AM

The dollar surged on safety bids on Monday following the attempted assassination of former US President Donald Trump, leaving the yen battling to remain afloat despite Tokyo’s alleged assistance.

Trading was sparse in Asia due to Japan’s holiday, but news of the Trump shooting dominated the cautious market atmosphere, with investors lowering their expectations for a Trump triumph in November’s US elections.

The dollar was widely on the front foot in early trade, driving the euro down 0.23% to $1.0885 and sterling down 0.17% to $1.2968.

The risk-sensitive Australian dollar dropped 0.18% to $0.6771, while the New Zealand dollar declined 0.35% to $0.6097.

The dollar remained unchanged against a basket of currencies, trading at 104.28.

Cash US Treasuries were not traded in Asia on Monday due to the Japan holiday, but 10-year Treasury futures dipped lower, signalling that rates will rise when cash trading resumes later in the day. Bond yields move inversely to prices.

Market analysts predict that a Trump presidency will result in a more hawkish trade policy, less regulation, and less climate change rules.

Investors also expect an extension of corporate and personal tax cuts that will expire next year, raising fears about mounting budget deficits under Trump.

Elsewhere in Asia, the yen remained on traders’ radars after Tokyo was believed to have interfered in the market to support the damaged Japanese currency last week.

The yen was last trading 0.3% down against the dollar at 158.36, after reaching a one-month high of 157.30 per dollar on Friday.

According to Bank of Japan figures released on Friday, officials may have spent up to 3.57 trillion yen ($22.4 billion) on Thursday in the most recent intervention bout this year.

The Ministry of Finance (MOF) has so far declined to comment on whether it was responsible for the yen’s rapid and sharp increase, instead stating that authorities are prepared to intervene in the foreign exchange market if needed.

For feedback and suggestions, write to us at [e-mail]