The dollar slid on Monday as investors braced for a potential pivot this week for the global economy as the United States chooses a new leader, and as it likely cuts interest rates again with major implications for bond yields, Reuters writes.
The dollar index eased 0.1% to 103.80. U.S. Treasury yields dropped 5 basis points (bps).
“Democratic candidate Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls and the winner might not be known for days after voting ends,” Reuters writes.
Analysts believe Trump’s policies on immigration, tax cuts and tariffs would put upward pressure on inflation, bond yields and the dollar.
“Markets are seemingly scaling back some Trump trades, and we suspect the next two days can see some abnormal swings in USD crosses due to tighter volatility conditions ahead of a closely contested and highly binary U.S. election,” ING FX strategist Francesco Pesole said.
Markets assume the Federal Reserve will choose to cut rates by a standard 25 basis points on Thursday. The Bank of England also meets Thursday and is expected to cut by 25 basis points.
