By Stefano Rebaudo and Gertrude Chavez-Dreyfuss
MILAN/NEW YORK (Reuters) -The U.S. dollar was slightly higher on Monday, capturing some safe-haven flows as investors digested U.S. President Joe Biden’s decision to end his re-election campaign, which is expected to increase volatility in the currency market . .
Investors were also eyeing next week’s crucial monetary policy meetings at the Federal Reserve, which could signal when the first rate cut would occur, and the Bank of Japan, which could raise rates.
But investor attention is fixated on the US presidential race.
“Any slight rise in the dollar is due to a small bid on ports after yesterday’s big political news…markets are largely shrugging it off, but it’s still a risk event that markets are trying to hedge against protect,” said Helen Given, FX. trader at Monex USA in Washington.
Biden announced Sunday he was leaving the race and endorsed Vice President Kamala Harris to replace him as the Democratic nominee in the November election.
Harris quickly gained the support of many within the party, but several household names remained silent, including former House Speaker Nancy Pelosi and former US President Barack Obama.
Former President Trump, the Republican candidate, has a big lead in the gambling markets.
The – a measure of its value against a basket of foreign currencies – rose 0.1% to 104.3.
“There is a growing consensus that the dollar will be stronger if Trump wins due to tax cuts and tariffs, but it is more complicated than that as Trump does not want a strong dollar,” said Athanasios Vamvakidis, head of global forex research at BofA. .
Some analysts argued it was too early to assess the impact of Biden’s move as markets await election polls in the coming days and weeks. Moreover, the dollar will undoubtedly remain strong regardless of who wins the presidential election.
Market participants also pointed out that the Japanese currency could be at an inflection point after falling since early 2024, as the Fed is set to cut interest rates and the BoJ is widely expected to tighten monetary policy soon.
The Federal Reserve Open Market Committee (FOMC) will meet on July 30, a day before the Bank of Japan.
The money markets have fully priced in an interest rate cut by the Fed in September.
The dollar fell 0.4% against the Japanese yen to 156.82.
The euro fell slightly against the dollar at $1.0875.
Analysts pointed out that the European Central Bank did not provide a concerted counterbalance to high prices for a September cut at last week’s policy meeting, which remains a strong base case.
The dollar rose 0.1% to 7.295 yuan in offshore trading after the People’s Bank of China unexpectedly cut the seven-day reverse repo rate to 1.7% from 1.8%, saying the move would improve open market operations and would support the real economy. Minutes later, surprise cuts in interest rates for one- and five-year loans followed.
The Australian dollar fell 0.8% to US$0.6631, giving up earlier gains on news of Biden’s withdrawal.
In cryptocurrencies, investors are bracing for the launch of exchange-traded funds tracking ether, the world’s second-largest cryptocurrency, in the coming days. But market players aren’t expecting the massive inflows that bitcoin ETFs generated when they first launched in January.
“The launch of ether ETF is a sign of validation for the space,” said Darius Tabai, CEO of Vertex (NASDAQ:), a decentralized exchange.
“It is unclear whether the ether ETF will generate a lot of new money. It has itself become a kind of isolated asset. And there isn’t much spillover from bitcoin into the rest of crypto.”
Ether was last down 1.6% at $3,450, while bitcoin fell to $66,894.
Currency
bid
prices at
July 22
02:38
pm GMT
Description RIC Last US Pct YTD Pct High Low
change bid at Close
Last
Session
Dollar 104.34 104.22 0.13% 2.93% 104.42 104.
index 18
Euro/pop 1.0881 1.0883 -0.02% -1.43% $1.0903 $1.0
ar 873
Dollar/Year 156.89 157.48 -0.37% 11.24% 157.615 156.
n 3
Euro/yen 1.0881 171.38 -0.39% 9.69% 171.65 170.
08
Dollar/SW 0.8893 0.889 0.04% 5.67% 0.8896 0.88
iss 71
Sterling/ 1.2913 1.2911 0.02% 1.47% $1.2942 $1.0
Dollars 873
Dollar/Approx. 1.3765 1.3728 0.29% 3.86% 1.3775 1.37
nadia 06
Australia/Thurs 0.6635 0.6685 -0.73% -2.66% $0.6702 $0.6
lar 632
Euro/Swiss 0.9674 0.9672 0.02% 4.18% 0.9682 0.96
s 57
Euro/Star 0.8425 0.8422 0.04% -2.83% 0.8431 0.84
ling 14
New Zealand 0.5975 0.6009 -0.54% -5.42% $0.6027 0.59
Dollar/Do 72
llar
Dollar/no 10.9849 10.9225 0.57% 8.38% 11.0062 10.8
road 781
Euro/Norwegian 11.9528 11.8737 0.67% 6.44% 11.9695 11.8
yes 58
Dollar/ZW 10.7222 10.6789 0.4% 6.5% 10.7309 10.6
Eden 279
Euro/Sweden 11.6665 11.6129 0.46% 4.86% 11.6718 11.6
en 001
