Dollar Bears Find Fresh Fuel in Trump’s Election-Delay Tweet
The Bloomberg Dollar Spot Index is set for its worst month in a decade.
(Bloomberg) -- Dollar bears say President Donald Trump’s tweet raising the idea of delaying the November election points to more weakness for an already beaten-down currency.
A gauge of the dollar dropped Thursday after Trump suggested that mail-in voting will be subject to fraud, and extended losses in New York afternoon trading to the lowest level since May 2018. It’s down about 9.5% since its 2020 peak, reached in March amid the turmoil as the pandemic shuttered the global economy.
Investors have been dumping the dollar for weeks amid dwindling Treasury yields and disappointment over America’s response to the coronavirus relative to Europe. Data Thursday showed the world’s biggest economy shrank at a record 32.9% annual pace in the second quarter, even amid unprecedented levels of monetary and fiscal stimulus from the Federal Reserve and the U.S. government.
“Anything that delays or potentially delays the smooth transition of power injects additional uncertainties for holding dollar assets and is clearly dollar negative,” Alan Ruskin, chief international strategist at Deutsche Bank AG, said in an email.
Under U.S. law, it would require an act of Congress to change the day of the election, slated this year for Nov. 3. Senate Republican leader Mitch McConnell said Thursday the election date is set in stone and cited past crises taking place during elections.
The euro on Thursday touched $1.1827, the highest since June 2018. Gold slipped, but still traded near record highs. After entering the New York session lower, three-month euro volatility, which covers the run-up to the the November election, climbed following the tweet.
The “acceleration of political uncertainty” helps support other currencies including the euro, yen, franc and pound as well as gold, said Mark McCormick, global head of FX strategy at TD Securities.
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