Dollar Edges Higher After Debate Boosts Trump’s Chances

Key Points:

• Markets think Trump’s debate win could mean a victory in November.

• Asian stocks are happy since there wasn’t much anti-China talk.

The dollar inched up in Asian markets as investors saw former president Donald Trump as the winner of the first U.S. presidential debate.

Bloomberg’s measure of the U.S. dollar rose as much as 0.2% on Friday before calming down, marking a sixth week of gains. President Joe Biden had a rough start in the debate, causing some to worry about his chances in the November election.

Key Takeaways:

• Trump's Promises: Trump promised to add 10% tariffs on imports if he wins in November. This could push up prices, making it less likely for interest rates to be cut and thus supporting the U.S. dollar.
• Market Response: "Markets likely think today’s debate hints at a Trump win in November,” said Carol Kong, a strategist at Commonwealth Bank of Australia. “Trump’s policies might raise prices and trade tensions, which could help U.S. interest rates and the safe-haven U.S. dollar."
• Asian Markets: Most Asian stock markets were positive during the debate. The lack of tough talk on China was seen as a pleasant surprise, helping Chinese stocks recover early losses.
• Currency and Yields: Asian currencies stayed mostly stable, though the Mexican peso fell almost 1% before recovering to a 0.2% loss. U.S. Treasury yields rose, and U.S. stock futures gained modestly ahead of an important inflation report.
• Betting Odds: Betting site PredictIt now shows Trump with a 58% chance of winning in November, up from 53% before the debate.
• Market Sentiment: While the dollar might weaken if consumer spending data due Friday shows a slowdown, it’s likely to stay strong next week as investors worry about elections in France and the U.K., said Mahjabeen Zaman, head of FX research at Australia & New Zealand Banking Group.

What This Means for Everyday Investors:

Imagine the dollar is like a trusty tool in your toolbox. When Trump talks about raising tariffs, it’s like adding a weight to that tool, making it more valuable but also causing prices to rise on many goods. This can impact everything from the cost of groceries to how much you pay for imported items.

Asian stocks were in a good mood during the debate since there wasn’t much harsh talk about China. This is like having a family dinner without any arguments – everyone is relieved and happier.

Currencies like the Mexican peso had a rollercoaster day, similar to seeing gas prices jump at the pump and then settle down. Investors are keeping a close eye on inflation data, which can affect everything from mortgage rates to car loans.

For most people, this news means keeping an eye on how these political events might affect their savings and investments. Just like watching a big sports game, every move in the debate can change the odds and impact the markets.

Keep an Eye On:

• How Trump’s potential tariffs might affect prices.
• The overall mood in Asian markets and its impact on global stocks.
• Currency movements and what they mean for international travel and shopping.