Currencies expected to show first major reactions to Trump shooting

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Currency markets in Asia on Monday are expected to provide the first significant reaction from investors to the assassination attempt on former President Donald Trump over the weekend.

Liquidity is likely to be hampered because markets in Japan will be closed Monday for a national holiday.

“There’s potential for extra volatility, and getting a clear read may be especially tough,” Garfield Reynolds, Asia team leader at Bloomberg, said in a column.

With prediction markets showing higher expectations of a Trump victory in the presidential election, the U.S. dollar may open stronger compared with other currencies. The dynamics may be like those after last month’s debate between Trump and President Joe Biden. Trump’s favorability improved afterward.

Bitcoin climbed above $60,000 after the shooting.

‘’This weekend’s events will likely cause increased volatility on Monday open both in stock and bond markets,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said. “We expect to see flight to safe havens like Swiss franc and gold. Bitcoin has reacted positively to the news as a result of kneejerk flight to safety.”

U.S. dollar moves against the yen may be limited after a possible intervention last week to support the Japanese currency, Bloomberg News reported. Cash Treasuries won’t trade until London opens on Monday.

Trump’s improved election chances should be of interest to bond investors because of the potential effects on government spending, Marko Papic, chief strategist at BCA Research, said in a report. After Biden’s poor showing in the debate, Treasury yields surged as investors pondered Trump’s fiscal plans.

“The bond market should at some point, become aware of President Trump’s higher odds of winning the White House than any of his rivals,” Papic said. “And I continue to believe that as his odds rise, so should the probability of a bond market riot.”