Dollar Strengthens as Markets Bet on Trump Leading Election Debate

As markets around the world closely watched the first US presidential debate between former president Donald Trump and President Joe Biden, the dollar inched higher in Asian trading, reflecting investor sentiment. The dollar strength gauge climbed up to 0.2% before leveling off, putting the US currency on track for a sixth consecutive weekly gain.

According to Carol Kong, a strategist at Commonwealth Bank of Australia in Sydney, initial reactions suggest that markets lean towards Trump as the perceived winner of the debate. However, it’s still early to draw any definitive conclusions.

During the debate, Treasury yields saw a slight uptick while US equity futures posted modest gains. The Mexican peso initially dropped nearly 1% before trimming its loss to 0.4%. Across Asian currencies, stability largely prevailed.

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Despite the uncertainty surrounding the US election, sentiment in Asian equities remained positive, with regional stock markets generally making gains throughout the debate. Chinese benchmarks reversed early losses and moved away from technical correction territory, as traders viewed the lack of hostile comments on China as a positive development. The Hang Seng China Enterprises Index rose as much as 0.8%.

Market strategist Redmond Wong from Saxo Capital Markets noted that while the absence of strong China-related remarks was a pleasant surprise for the region, the approach to handling China is not solely determined by the presidential candidates but also by Congress. This could potentially lead to increased tensions in the near future.

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Xin-Yao Ng, director of investment at abrdn, mentioned that while the lack of aggressive anti-China rhetoric might have caught some off guard, the bipartisan stance against China suggests that there may not be significant material for either candidate to critique each other.

Overall, the reaction in Asian equities was relatively positive following the debate, setting the stage for potentially intriguing developments in the global markets. Stay tuned to Extreme Investor Network for all the latest updates and expert insights on the intersection of politics and finance.