SINGAPORE: Bitcoin surged to a three-month high in early trading on Monday, coinciding with expectations of a stronger dollar as the U.S. presidential election approaches in two weeks.
Polls indicate a rising likelihood of former President Donald Trump winning the November 5 election, which is expected to bolster the dollar.
His proposed tariff and tax policies are viewed as likely to maintain high U.S. interest rates and weaken the currencies of trading partners.
Last week, major currency movements were influenced by a dovish rate cut from the European Central Bank and robust U.S. economic data, which pushed back expectations for how quickly U.S. rates might decline, especially if Trump secures the presidency.
The Japanese yen was down 0.1% at 149.32 per dollar, remaining just above the 150 mark, which it briefly surpassed last week for the first time since early August.
The dollar index, which measures the dollar against major rivals, stood at 103.45. It experienced a 0.3% drop on Friday as risk appetite improved across markets following China’s announcement of more details on its stimulus package, yet it recorded a 0.55% gain for the week.
The euro was flat at $1.0866, while the British pound also held steady around $1.3045.
Bitcoin rose 0.8% to $69,400, reflecting an 18% increase since October 10, partly due to Trump’s improving election prospects and a perceived softer stance on cryptocurrency regulation during his administration.
With no major economic events scheduled this week, market focus will shift to corporate earnings and the risks associated with the upcoming U.S. election.
Chris Weston, head of research at Pepperstone, suggested that traders may need to consider placing more decisive election trades in the coming days. Brad Bechtel of Jefferies highlighted that rising real interest rates are aiding the dollar, particularly against the euro, Swiss franc, and Mexican peso, a trend expected to persist into the election and beyond.
Last week saw the yen fall 0.3%, the euro decrease by 0.6%, and the Mexican peso drop 3%, with the euro down over 3% in three weeks and nearing a two-and-a-half-month low.
