Dollar edges up as markets view Trump leading election debate

The dollar inched higher in Asian trading as markets assessed former President Donald Trump was ahead in the first U.S. presidential debate.

A gauge of the dollar strength climbed as much as 0.2% on Friday before the move pared, with the U.S. currency on track for a sixth straight weekly gain. President Joe Biden stumbled through early exchanges in the debate, a performance that may intensify worries about his ability to defeat Trump in the November election.

“Judging by the reactions so far, markets think President Trump is ‘winning’ the debate,” said Carol Kong, a strategist at Commonwealth Bank of Australian in Sydney. “But its still early to make the conclusion.”

Treasury yields ticked higher while U.S. equity futures saw a modest gain. The Mexican peso dropped almost 1% before paring its loss to 0.4%. Asian currencies were mostly steady.

Sentiment in Asian equities was largely upbeat, with most regional stock markets advancing during the debate. Chinese benchmarks recouped early losses and edged away from technical correction territory, as the lack of hawkish comments on China was seen as a positive surprise by traders. The Hang Seng China Enterprises Index was up as much as 0.8%.

It’s a “positive surprise for this part of the world, but only moderately so,” said Redmond Wong, market strategist at Saxo Capital Markets. The political consensus on dealing with China doesn’t only depend on the presidential candidates, but also Congress, he said, adding there could be some escalation of tensions in the coming months.

The lack of hawkish China comments was “probably a surprise, but anti-China is an united, bipartisan stance, so probably there’s not that much to attack on each other,” said Xin-Yao Ng, director of investment at abrdn.