2 weeks Ago By Bloomberg News
The dollar rose to its highest since July as early results of the US presidential vote reinvigorated appetite for trades that hinge on the former President Donald Trump’s protectionist policy vows. The Bloomberg Dollar Spot Index was up 0.9% amid haven demand and as traders returned to wagers seen as benefiting from low-tax and high-tariff policies under a potential Trump administration.
The close contest has elevated volatility in markets as traders tried to gauge the potential fallout of a victory by Trump, whose tariff and tax-cut plans would roil global trade and potentially fan inflation pressures in the US. That drove hedge funds and other traders to prepare by plowing into so-called Trump trades for much of October, elevating the dollar and dragging down others like the Mexican Peso, before Vice President Kamala Harris’s strong showing in some polls reversed some of that this week. Currencies from the yen to the Mexican peso traded at elevated levels of volatility as investors closely watched the tallies to roll in.
A measure of overnight implied volatility on the dollar-yen pair traded at its strongest mark since July 2023, outpacing the expected swings seen during the 2016 and 2020 US elections..
