The dollar surged and Bitcoin hit a record high on Wednesday, with traders wagering on a Donald Trump victory after he secured key swing states crucial for the White House. This increased speculation about fresh tax cuts, tariffs, and rising inflation.
Although polls suggested a tight race, early results showed the Republican candidate performing better than his Democratic rival, Vice President Kamala Harris.
Both candidates won expected states, but signs that Trump could secure a second term sparked a rally in the so-called ‘Trump Trade’. He triumphed in Georgia and North Carolina, with other states still in play, while Fox News declared him the winner in Pennsylvania, tipping the election in his favour.
The news that the Republican Party had taken control of the Senate further bolstered expectations of sweeping tax cuts, increased tariffs, and deregulation—all seen as favourable for the dollar.
The US currency climbed 1.5% to ¥154.33, its highest since July, and gained more than 1% against the euro and over 3% against the Mexican peso. Bitcoin surged by more than $6,000 to a record $75,371.69, surpassing its previous peak of $73,797.98 from March.
Trump has promised to make the US the “bitcoin and cryptocurrency capital of the world” and to appoint tech mogul Elon Musk to oversee a comprehensive audit of government waste.
“The price of bitcoin has closely followed Trump’s position in the polls and on betting markets,” noted Russ Mould, an analyst at AJ Bell. He added that investors may be betting that a Republican win would lead to higher demand for digital currency.
Analysts suggested that a complete Republican sweep of Congress and the White House could further boost the dollar and Treasury yields due to Trump’s plans for tax cuts and import tariffs.
Stephen Innes of SPI Asset Management said, “Republican control of the Senate and House could bring sweeping spending or tax policy changes. However, gridlock in Congress might suppress volatility.”
Peter Esho, economist at Esho Capital, pointed out that markets were pricing in expectations of higher growth and inflation.
Such an outcome could complicate matters for Federal Reserve Chairman Jerome Powell, as Trump’s policies are seen as inflationary.
The election coincides with the Federal Reserve’s latest policy meeting, with expectations of a 25 basis point rate cut following a 50-point reduction in September.
The dollar’s rally against the yen drove Tokyo stocks up by more than 3% at one point, while markets in Sydney, Singapore, Taipei, Mumbai, and Bangkok also saw gains. However, there were losses in Shanghai, Seoul, Wellington, Manila, and Jakarta, with Hong Kong experiencing a sharp drop of nearly 3% amid concerns about the potential impact of a Trump presidency on China and US-China relations.
The election’s outcome is of significant interest globally, particularly in China, where Trump had previously threatened to escalate the trade war by imposing massive tariffs on Chinese goods. The vote also coincided with a crucial meeting of Chinese leaders, who are preparing a stimulus package to support growth and assist the struggling property sector, which is dealing with a severe debt crisis.
Key figures around 0710 GMT –
Dollar/yen: UP at 154.21 yen from 151.60 yen on Tuesday
Euro/dollar: DOWN at $1.0711 from $1.0930
Pound/dollar: DOWN at $1.2853 from $1.303
Euro/pound: DOWN at 83.32 from 83.82 penc
Tokyo – Nikkei 225: UP 2.6 percent at 39,480.67 (close)
Hong Kong – Hang Seng Index: DOWN 2.6 percent at 20,467.69
Shanghai – Composite: DOWN 0.1 percent at 3,383.81 (close)
West Texas Intermediate: DOWN 1.9 percent at $70.59 per barrel
Brent North Sea Crude: DOWN 2.0 percent at $74.03 per barrel
New York – Dow: UP 1.0 percent at 42,221.88 (close)
London – FTSE 100: DOWN 0.1 percent at 8,172.39 (close)