Dollar Surge and Bitcoin Boom Amid U.S. Election Angst

The dollar surged and bitcoin reached a three-month high due to rising U.S. bond yields and the presidential election's influence on markets. Divergence in economic performance between the U.S. and Europe is impacting currency movement. Cryptocurrencies gain traction on anticipated Trump policies easing regulation.

The dollar experienced a notable climb on Monday while bitcoin surged to a three-month high, propelled by rising U.S. bond yields and the upcoming presidential election that continually impacts global markets. Last week's currency movements were influenced by the European Central Bank's dovish rate cut and robust U.S. economic data, reducing expectations for rapid U.S. rate declines if Donald Trump regains the presidency.

The dollar index, which assesses the greenback against major currencies, stood at 103.63, up 0.17%. Although it dropped 0.3% on Friday due to improved market risk appetite post-China's stimulus details announcement, it logged a weekly gain of 0.55%. The euro and sterling weakened, citing stronger U.S. economic performance compared to Europe, marked by solid employment data and GDP tracking well for the quarter, contrasted by Europe's lackluster economic situation and an accommodative ECB. Analysts suggest that Trump's potential tariff and tax policies may keep U.S. interest rates elevated, benefiting the dollar but straining international trade partners.

Bitcoin gained momentum, as expectations rise for the Trump administration's leniency towards cryptocurrency regulation. It briefly touched $69,487 before settling slightly lower. The yen saw a slight decline, demonstrating the preference to trade dollars over euros, Swiss francs, and Mexican pesos. As markets brace for the U.S. election and a Japanese general election, investors weigh timing for election trades.

(With inputs from agencies.)