Dollar Weakens Ahead of US Election and Potential Fed Rate Cut

4 Nov 2024 , 10:26 AM

The dollar fell in Asia on Monday as investors prepared for a possible shift in the world economy this week as the US selects a new leader and is expected to lower interest rates once more, which will have a significant impact on bond yields.

The euro continued its early ascent, rising 0.6% to $1.0901, and was poised to test resistance at $1.0905. Threatening support around 151.45, the dollar dropped 0.9% against the yen to 151.60. At 103.63, the dollar index decreased 0.3%.

Treasury futures recovered some of Friday’s losses with a strong 12-tick rally.

In opinion polls, Republican Donald Trump and Democratic nominee Kamala Harris are still essentially tied, and the outcome may not be known for days after the election.

Markets believe the Fed will lower rates by a standard 25 basis points on Thursday instead of repeating its disproportionate half-point easing because of uncertainty surrounding the conclusion.

According to futures, there is an 83% possibility of a move of the same magnitude in December and a 99% chance of a quarter-point decrease to 4.50%–4.75%.

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