Dollar edges lower following Biden’s election exit
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The dollar slipped and Asian stocks fell after Joe Biden ended his reelection campaign and endorsed Vice President Kamala Harris; China’s central bank cut a key short-term interest rate; A Bloomberg gauge of the US currency’s strength fell 0.2% Monday after the US President bowed to pressure from the Democrats and pulled out of the November election race, while the Mexican peso climbed; Stocks opened lower in Japan and South Korea, adding to weakness in Australia; The People’s Bank of China said it will lower the seven-day reverse repo rate to 1.7% from 1.8%; Investors have mulled for weeks a greater prospect Trump will win the November election following Biden’s weak debate performance, only for bets on a Trump win to accelerate last week following an assassination attempt on the former president; The dollar rose for the first time in three weeks, while emerging market assets suffered amid fears of higher trade tariffs, increased US-China tensions and looser US fiscal policy; The question for investors is whether to stick with such trades now that Biden has dropped his bid for reelection; Markets may be jumpy as traders wait to see if Harris secures her party’s nomination and weigh if she can then gather enough momentum to challenge Trump’s lead in the polls; In commodities, oil and gold rose in early trading Monday; The S&P 500 dropped 0.7% on Friday to cap its worst week since April, while the Nasdaq 100 slumped about 1%; China’s one- and five-year loan prime rates are expected to remain unchanged later Monday as the nation’s central bank shrugs off anemic second-quarter growth; Elsewhere this week, traders will be focused on economic activity data in Europe, US second quarter growth and a slew of corporate earnings; Tesla Inc. and Alphabet Inc. will be the first of the “Magnificent Seven” to report earnings on Tuesday

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