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The stories that matter on money and politics in the race for the White House

The dollar has roared to its biggest monthly gain in more than two years, propelled by bets that strong economic data and a victory for Donald Trump in next week’s presidential election will lead to interest rates staying higher for longer.

An index measuring the dollar against a basket of six other currencies, including the pound and Japan’s yen, jumped 3.2 per cent in October, its best month since April 2022.

Economists and strategists said the greenback’s sharp rise reflected persistent signs of economic resilience, including surprisingly strong September payrolls data and evidence of higher consumer spending.

“It’s been the perfect storm of dollar-supportive information over the last few weeks,” said Eric Winograd, chief economist at AllianceBernstein. “Our data continues to paint a picture of an economy that isn’t really slowing.”

Market participants said increasing expectations in the market of a Republican election victory had bolstered the dollar’s appeal.

The latest polls put Trump and Democratic candidate Kamala Harris virtually neck and neck, setting the stage for an extremely tight race on November 5.

Investors believe that if Trump wins and trade tariffs and tax cuts are implemented, then inflationary pressures would be compounded and the Federal Reserve would be less likely to cut interest rates rapidly.

“It’s a combination of better than expected economic data. [And] also the growing consensus that Trump is likely to win the election,” said Andrzej Skiba, head of Bluebay US fixed income at RBC Global Asset Management. “With Trump, you could expect greater pressure on inflation than otherwise would be the case.”

While Trump has stated his preference for a softer dollar, strategists said it is logistically difficult to weaken a currency.

After policymakers lowered rates by an unusually large 0.5 percentage points in September, markets priced in at least one more jumbo-sized cut before the year-end.

But those expectations have been scaled back over the past month. Futures markets are pricing in a quarter-point reduction at next week’s Federal Reserve meeting and those views were cemented after October payrolls came in much lower than expected on Friday, albeit distorted by major hurricanes and worker strikes, while the unemployment rate held steady.

Markets at the end of this week showed rising odds of another quarter-point cut in December.

Still, were Harris to win the election, Mark McCormick, head of FX strategy at TD Securities, does not “think Harris is fundamentally negative for the dollar”.

Some positions may unwind if Trump loses the election, he said. “But that’s a dip,” he added. “Data, central banks, the economic outlook — all of those things are moving back in favour of the US.”

For AllianceBernstein’s Winograd, “the extent of that [currency] weakening has to be limited by the [recent economic] data being positive . . . I don’t think the dollar will undo an entire month’s worth of gains.”

Also Read: US election in numbers: Who won the donation race, Kamala Harris or Donald Trump?

Who is Liz Cheney?

Liz is a 58-year-old attorney and former republican politician. She served as a former congresswoman from Wyoming who served in the U.S. House of Representatives from 2017 to 2023. She is known for her strong conservative views and for being a vocal critic of Trump. She has been a sore spot for Trump since she switched to Kamala Harris’ side.

Previously she was a supporter of the Republican presidential nominee, however, this support went for a toss after the January 6 Capitol attack. She stated that Trump’s actions during the Capitol riot in 2021 showed he “can never be trusted with power again,” as reported by BBC. In the past month, she has campaigned alongside Harris to connect with disaffected Republicans in key swing states.

Liz is the daughter of former Vice President Dick Cheney under George W. Bush and was a key architect of the Iraq War. She has often defended her father’s decisions regarding military interventions and has been an advocate for a strong American presence on the global stage. However, she has also faced criticism for her support of the Iraq War and has taken a stand against the withdrawal from Afghanistan. This is another point where she locked horns with Trump because of the latter’s approach to foreign policy and national security.

She has co-authored three books with her father: his autobiography My Time: A Personal and Political Memoir (2011), Exceptional: Why the World Needs a Powerful America (2015), and Heart: An American Medical Odyssey (2013), the latter written with her father’s heart surgeon.

In 2023, she published her own memoir, Oath and Honor: A Memoir and a Warning, which details the January 6th attack, its causes, and its aftermath.

Also Read: Melania Trump leaves NYC with son Barron for next ‘big move’ ahead of the US elections

What was Trump’s violent fantasy about Liz Cheney?

Trump joined conservative broadcaster, Tucker Carlson on Thursday night at an event in Glendale, Arizona. He criticised the Iraq war, highlighting Cheney’s decision to pardon Scooter Libby, who was convicted of lying to investigators in 2007.

He then took a jab at his daughter Liz as he said, “His daughter is a very dumb individual, very dumb. She’s a radical war hawk.” Trump added, “Let’s put her with a rifle standing there with nine barrels shooting at her. Let’s see how she feels about it. You know when the guns are trained on her face,” as reported by The Independent.

He also criticised the government officials before one final blow at Liz. The former president said, “They’re all war hawks when they’re sitting in Washington in a nice building saying, ‘Oh, gee, well, let’s send 10,000 troops right into the mouth of the enemy.” He continued “But she’s a stupid person. And I used to have meetings with a lot of people and she always wanted to go to war with people.”

Netizens were infuriated with Trup’s violent comment as one user wrote on X, “As a woman I do not tolerate threats against other women, I stand with Liz Cheney. Trump is not fit for office.” A second user wrote, “Isn’t it the mark of a true Coward to threaten a Woman?” A third user wrote, “As a man and an American I DO NOT tolerate threats against women…Anyone for that matter!!! I stand with Liz and all who are threatened by weak men who feel they are entitled to make threats and try to exhibit dominance over anyone…”

US stocks started November on the front foot, but drops for several Big Tech stocks in recent sessions meant Wall Street’s main indices notched up weekly declines.

The S&P 500 ended 0.4 per cent higher on Friday, with the consumer discretionary, healthcare and tech sectors the benchmark index’s best performers, and utilities and energy among its worst. The Nasdaq Composite gained 0.8 per cent.

Shares of Big Tech companies had sizeable moves during the week, as several members of the Magnificent Seven reported results.

Amazon and Apple, which reported on Thursday afternoon, on Friday finished up 6.2 per cent and down 1.3 per cent, respectively. The varying fortunes of tech stocks may have had more of an influence over market direction today than the official jobs report for October, which was distorted by the impact of hurricanes and the Boeing strike.

Owing largely to a tech-led sell-off on Thursday, the Nasdaq Composite chalked up its first weekly decline in two months and the S&P 500 had its first back-to-back weekly drop since early August.