By Koh Gui Qing and Tom Wilson

NEW YORK/LONDON (Reuters) – The dollar fell while stocks posted slight gains on Monday as investors tread cautiously ahead of the U.S. presidential election that will impact the global economy, with a rate cut of interest from the US Federal Reserve also expected later in the week.

Trump’s policies on immigration, tax cuts and tariffs could put upward pressure on inflation, bond yields and the dollar, analysts say, while Harris is seen as the continuity candidate.

“We are too evenly divided and polarized to suggest a red sweep,” Frank Luntz, a Republican consultant and pollster, told the Reuters Global Markets Forum. “The Senate appears to be tilting Republican, but the presidency and the House are simply too close to call.”

The MSCI index of world stocks was flat, while the dollar index, which measures the greenback against a basket of currencies, was also unchanged at 103.86.

The dollar slipped against a host of European and Asian currencies, losing 0.46% against the euro to $1.088 and 0.6% against the Japanese yen to 152.11. (USD/)

In the U.S. Treasury market, which priced in last month’s Trump victory that sent yields higher, traders balanced their positions Monday after a poll showed Harris with a surprise lead in Iowa. (WE/)

U.S. Treasury yields fell across the board. The yield on the US benchmark 10-year bond fell more than 5 basis points (bps) to 4.3089%.

The two-year U.S. Treasury yield fell for the first time in six days, down 2.8 basis points to 4.1743%.

European stocks lost 0.3%, despite gains in energy stocks following OPEC+’s decision to delay plans to increase production that sent oil prices soaring.

“Tomorrow will shape the direction of the global economy and geopolitics for the next four years,” write Deutsche Bank analysts.

They warned that “there remains a large degree of uncertainty around the outcome, including the very close race in the House (of Representatives), and when we will know it.”

ZOOM ON THE PRICES

The week will also provide investors with global monetary policy catalysts. Of the many rate decisions, the most closely watched is that of the Fed, while decisions are also expected from the Bank of England (BoE), Reserve Bank of Australia (RBA), Riksbank of Sweden and Norges Bank of Norway.

Markets are moving towards a Fed rate cut of 25 basis points.

“Based on current data, we see no reason for (the FOMC) to rush into rate cuts,” ANZ analysts said.

“The election and uncertainty about the future fiscal trajectory also support the case for caution in recalibrating monetary policy.”

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7%, recovering from its fall to a five-week low on Friday.

This week’s meeting of China’s powerful National People’s Congress (NPC) standing committee is high on investors’ radar.

The NPC meets Monday through Friday, and any additional details on a series of recently announced stimulus measures are on the agenda.

Chinese blue-chip stocks gained 1.4%, while the Shanghai Composite Index rose 1.2%.

Reuters reported that at the NPC meeting, China was considering approving the issuance of more than 10 trillion yuan ($1.4 trillion) in additional debt over the next few years to revive its fragile economy , a budget plan that should be further strengthened if Trump wins. the election.

The Bank of England, which meets on Thursday, is also expected to cut rates by 25 basis points. His decision was complicated by a sell-off in government securities following the Labor government’s budget last week.

Sterling rose 0.3% to $1.295, helped by a weaker dollar. It fell 0.3% last week.

Oil prices rose after OPEC+ announced on Sunday that it would delay a planned production increase for December by a month. Brent futures rose 2.7% to $75.08. US crude West Texas Intermediate (WTI) gained 2.95% to $71.54. (OR)

(Reporting by Tom Wilson in London and Koh Gui Qing in New York, additional reporting by Rae Wee in Singapore, editing by Gareth Jones, Ros Russell and Matthew Lewis)

Disclaimer: This report is automatically generated from the Reuters news service. ThePrint assumes no responsibility for its content.