On Monday, the US dollar began the day with uncertainty and maintained its volatility throughout European trading sessions.
The dollar could find support as expectations of a Trump presidency win increase, especially after an assassination attempt over the weekend.
A Trump presidency could strengthen the dollar if he adopts hawkish trade policies, relaxed regulations on climate change, and potential extensions of both corporate and personal tax cuts. These measures might affect the budget, potentially leading to inflationary pressures re-emerging.
In the bond market, 10-year Treasury futures opened higher before dipping to a certain extent.
The market could see a steepening of the US Treasuries curve as Trump’s election odds improve. The assassination attempt and increased odds of him winning the presidency led market participants to sell longer-term US Treasuries, causing a slip in 10-year Treasury futures and driving yields higher, reflecting expectations that Trump’s economic policies could drive inflation and debt upward.
Adding to the volatility, a speech by Federal Reserve Chair Jerome Powell scheduled for later today could influence both the dollar and treasury bonds, particularly in light of a potential rate cut in September.
