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The US dollar dropped sharply as investors rethought their bets on Donald Trump’s reelection, following a batch of new polling data.
The dollar index, which measures the currency’s strength against a basket of major rivals, took a notable dip, hitting a six-week low as the dollar slid against key currencies, including the yen and the Australian dollar.
Treasury futures, often viewed as a safe haven, saw a bump up in activity as traders adjusted for the possibility of a Harris administration. One key poll in Iowa, conducted by the Des Moines Register, showed Harris with a narrow 47%-44% lead in a state Trump has won in every previous election.
This unsettled investors who had positioned themselves for a Trump victory, which has typically aligned with a higher Treasury yield and a stronger dollar. Other national and swing-state polls show an extremely close race, with voters split down the middle.
<h3 id="span-style-font-weight-400-dollar-treasury-yields-react-to-shifts-in-polling-span">Dollar, treasury yields react to shifts in polling</h3>
Trump’s support for looser fiscal spending and aggressive tariff policies has investors cautious, as many fear it could balloon the federal deficit and spark inflation, weakening the appeal of Treasuries over time.
Asian markets took a cue from the recent polling data, with shares in Hong Kong and mainland China climbing early. US stock futures showed stability after Wall Street’s Friday rally, which came on the back of solid earnings reports from tech giants like Amazon and Intel.
With Japanese markets closed for a holiday, there’s a lack of Treasury trading during Asian hours, shifting more focus to movements in dollar-linked assets elsewhere.
Beyond the election, global trading is also being shaped by central bank rate decisions this week. The Federal Reserve is expected to announce a 25 basis point rate cut on Thursday. This comes as recent jobs data highlighted a slowdown in hiring—the slowest since 2020—while unemployment remained low.
Analysts believe that these numbers might be skewed by recent hurricanes and labor strikes, creating uncertainty around the Fed’s approach to monetary easing.
<h3 id="span-style-font-weight-400-oil-prices-rise-as-opec-postpones-output-hike-span">Oil prices rise as OPEC+ postpones output hike</h3>
In commodity markets, West Texas Intermediate (WTI), the US crude oil benchmark, rose by more than 1% on Monday, extending its winning streak to four days.
OPEC+ made headlines by delaying a planned production increase until December, a move that came amid rising tensions in the Middle East, with Iran increasing its aggressive stance toward Israel. The delay adds pressure on global energy prices, with crude oil hovering around $70.75 a barrel.
Gold, often seen as a safe-haven asset, stabilized after retreating from its recent record highs. China added intrigue to the markets by introducing measures to attract foreign investment just before the US election — likely aimed at insulating its economy from the potential volatility of a Trump comeback.
The China Securities Regulatory Commission, along with other agencies, announced on Friday that foreign investors could now act as strategic investors in publicly listed Chinese firms, a huge change.
This week, investors are watching for further policy developments as China’s National People’s Congress Standing Committee meets in Beijing.
The markets are hoping for hints of additional fiscal stimulus to revive China’s sluggish economy. Meanwhile, Citi Research’s US economist Veronica Clark <a href="https://www.bloomberg.com/news/articles/2024-11-03/dollar-weakens-as-us-polls-signal-no-clear-leader-markets-wrap?srnd=phx-crypto" rel="noopener noreferrer nofollow" target="_blank">shared</a> her expectation on “Bloomberg The Close,” forecasting a potential 50 basis point cut by the Fed at its December meeting.
Here’s a snapshot of critical events this week:-
<ul>
 <li style="font-weight: 400;">Monday: India HSBC Manufacturing PMI, US factory orders, Eurozone Manufacturing PMI</li>
 <li style="font-weight: 400;">Tuesday: Australia rate decision, US ISM Services Index, US election day</li>
 <li style="font-weight: 400;">Wednesday: Brazil rate decision, ECB’s Christine Lagarde speaks, Vietnam trade and CPI data</li>
 <li style="font-weight: 400;">Thursday: Fed rate decision, initial jobless claims, Norway rate decision</li>
 <li style="font-weight: 400;">Friday: Canada employment data, US consumer sentiment index</li>
</ul>
<h3 id="span-style-font-weight-400-market-movements-and-key-indicators-span">Market movements and key indicators</h3>
Stocks showed mixed performance as market participants reacted to the latest polling data and monetary policy expectations. S&amp;P 500 futures fell 0.2% in Tokyo, with Hang Seng futures down by the same margin. However, the Nikkei 225 futures rose 1.3%, and Australia’s ASX 200 rose slightly. The Euro Stoxx 50 futures dipped 0.3%.
Currency markets reflected similar movements. The Dollar Spot Index fell 0.4%, signaling the broad-based weakness in the greenback. The euro advanced 0.4% to $1.0878, while the yen appreciated 0.6%, hitting 152.08 per dollar. China’s offshore yuan gained 0.4%, trading at 7.1073 per dollar.
In cryptocurrencies, Bitcoin fell 0.7% to around $68,610.13, with Ether also sliding 0.8% to $2,448.04. In bond markets, Australia’s 10-year yield added two basis points to reach 4.56%. The US bond market remains sensitive to election-driven speculation around tariffs and fiscal spending, with analysts watching how results might influence future Treasury yields.
Meanwhile, Trump’s rhetoric has turned even more protectionist, particularly regarding tariffs. In a recent conversation with Bloomberg’s editor-in-chief, he claimed, “To me, the most beautiful word in the dictionary is ‘tariff.’”
Although Trump hasn’t outlined his exact plans, his intent to disrupt trade policy is clear. He has floated a universal tariff of up to 20% and a Chinese import duty as high as 60%. This stance could deepen the trade divide, with a massive economic impact on Trump-supporting states in the South and Midwest.
Analysts estimate that a universal 10% tariff, alongside a 60% duty on Chinese goods, would generate gross revenue of around $4 trillion over the next decade. Yet, adjusted for inflation and interest, net revenue might land closer to $3 trillion. This windfall still wouldn’t be enough to replace the income taxes expected to bring in over $33 trillion in the same period.
The real cost of these tariffs wouldn’t hit foreign exporters as much as Trump claims. Past tariffs, since 2018, showed no decrease in pre-tax prices of imported goods. Instead, retaliatory tariffs from trading partners led to lower US exports and wage losses. Analysts say the real impact of Trump’s current tariff proposals would likely hit hardest in the states where his support is strongest.
Foreign retaliation, if it mirrors past patterns, could worsen these regional effects. Trump’s previous tariffs drew targeted responses from foreign governments that aimed to impact Republican-leaning areas, often targeting agricultural exports. The irony here is hard to miss—many voters who favor Trump’s approach to trade barriers would likely feel the brunt of these costs.
At the end of the day, these protectionist policies could stymie economic growth, while advocates claim they benefit American workers and industries. The reality, however, shows a high price for the very voters Trump claims to represent.

US dollar dips as some national polls swing toward Harris

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