Currencies

Asian currencies were nursing steep losses from the prior session after news of Trump’s victory sparked sharp increases in the dollar and Treasury yields. But they steadied from these losses on Thursday, with speculation over government intervention in Japan and China also helping their respective currencies

The dollar was set for its biggest one-day rise since March 2020 against major peers on Wednesday and bitcoin jumped to an all-time high as so-called “Trump trades” took off, with traders increasingly betting on a U.S. election victory for the former president.

The greenback has been hit, in part, by an unwinding “Trump trade,” as recent polls showed Donald Trump and Kamala Harris set for a tight presidential race, with the majority of voting starting later Tuesday. 

Most Asian currencies firmed on Monday as the dollar fell sharply from recent highs after soft labor data, with focus turning squarely to the upcoming presidential election and a Federal Reserve meeting. 

The yen remained under pressure on Thursday as the Bank of Japan kept ultra-low interest rates steady, while the U.S. dollar consolidated ahead of jobs data later this week and the U.S. presidential election next week.

Mixed U.S. indicators overnight, showing a loosening U.S. jobs market but a confident consumer, provided little clarity on the outlook for Federal Reserve easing, allowing the greenback to drift lower with Treasury yields on Tuesday following a strong seven-year note auction. 

The dollar has been boosted of late by a series of economic data releases pointing to the underlying strength of the U.S. economy, resulting in investors pencilling in a slower pace of interest rates from the Federal Reserve than had previously been seen likely.

Most Asian currencies weakened on Monday with the Japanese yen sliding to a three-month low amid bets that the loss of a parliamentary majority for Japan’s ruling party diminished the prospect of higher interest rates in the country. 

The Japanese yen steadied near its weakest level in three months as Japan geared up for a tightly contested general election over the weekend, while verbal warnings on potential currency market intervention also kept traders skittish towards the currency.

Most Asian currencies steadied from recent losses on Thursday with the Japanese yen remaining close to near three-month lows, while the dollar remained underpinned by expectations of slower interest rate cuts.