The dollar rose on Tuesday and Asian shares were mixed as investors weighed the possibility of another Donald Trump presidency after last week’s poor debate performance by incumbent Joe Biden.
Speculation about a second term for the Republican increased after the Supreme Court ruled that all former leaders had “absolute immunity” from criminal prosecution for “official acts” done while in office, but could face criminal penalties for “unofficial acts Β».
The ruling comes as Trump faces criminal charges over his efforts to overturn his 2020 election loss to Biden, but that trial had been suspended while judges considered his immunity claims.
Bets on a second term for the controversial tycoon rose after Thursday’s debate, in which he was widely seen as coming out on top after Biden struggled to come up with answers and tripped over his lines.
Euro raises concerns over French election
That led to calls for him to step down over concerns about his mental state, but Democrats have pushed back and are reportedly seeking a vote next month that would formally make him the party’s nominee for the November election.
“These two headlines, and given the reaction to President Biden’s first debate, continue to suggest that a Trump presidency looks more likely at this stage,” National Australia Bank’s Tapas Strickland said in a comment.
Observers said the prospect of another Trump presidency fueled talk of tax cuts and a fresh rise in inflation, pushing up yields and dampening hopes for rate cuts.
That, in turn, strengthened the dollar against its major peers, pushing it toward 38-year highs against the yen, putting Japanese authorities on alert after earlier warning they were ready to intervene in currency markets to support the unit.
Yen weakens further to focus on Tokyo, Asian shares rise
The euro was also slightly softer, although it managed to hold on to most of Monday’s gains in a relief rally that came after the far-right National Rally (NR) looked unlikely to win an outright majority in French parliamentary elections as feared . .
President Emmanuel Macron and his allies are now engaged in intense campaigning and trading ahead of a run-off election on Sunday as they try to deny the NR an outright majority and control of the government.
However, Luca Santos at ACY Securities said: βBased on the current results, the two most likely outcomes are a hung parliament without an absolute majority or an RN coalition government.
βThe large number of constituencies won by the RN, combined with tight races between left and center candidates, complicates strategic withdrawals and increases the risk of a less euro-friendly RN coalition government.
“Consequently, the euro’s current relief rally is unlikely to continue ahead of the second election round.”
Trump says inflation is ‘killing our country’ under Biden
Asian stocks were mixed, with Hong Kong enjoying a rare rally after a recent string of losses, while Tokyo, Shanghai and Singapore also rose.
However, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta fell.
Keys around 02:30 GMT
Tokyo – Nikkei 225: UP 0.4 percent at 39,780.58 (break)
Hong Kong – Hang Seng Index: UP 1.4 percent at 17,970.58
Shanghai – Composite: UP 0.2 percent to 3,000.29
EUR/USD: DOWN at $1.0735 from $1.0743 on Monday
GBP/USD: DOWN to $1.2640 from $1.2648
Euro/pound: UP at 84.94 pence from 84.92 pence
Dollar/yen: UP to 161.58 yen from 161.46 yen
West Texas Intermediate: UP 0.2 percent to $83.55 a barrel
North Sea Brent crude: UP 0.3 percent at $86.84 a barrel
New York – Dow: UP 0.1 percent at 39,169.52 (close)
London – FTSE 100: FLAT at 8,166.76 (close)
Source: AFP