The dollar looks set for its biggest one-day rise against other big currencies since March 2020 and bitcoin has jumped to an all-time high amid a jump in “Trump trades” as markets increasingly bet on a US election victory for the former president.
Donald Trump declared victory on Wednesday morning after taking the key swing state of Pennsylvania. Republican Trump led Democrat Kamala Harris by 267 electoral votes to 214 on Wednesday morning, with 270 electoral votes needed to win the presidency.
The US currency’s climb began after very early indications of a Republican win in Georgia and gathered pace throughout the day.
The dollar index – which measures the currency against six major peers including the euro and yen – advanced 1.63% to 105.04 as of 0615 GMT, and was earlier as high as 105.19, a four-month peak. That put it on course for its best day since March 2020.
Trump’s tariff and immigration policies are seen as inflationary by analysts, buoying up the dollar.
Bitcoin climbed as much as 8.63% to reach a record $75,389. Trump is seen as more actively supportive of cryptocurrencies than Harris.
“Although there are still votes left to count, as Trump nears a victory, the US dollar index has picked up steam,” said James Kniveton, a senior corporate forex dealer at Convera.
“Trade-related currencies are likely to face the brunt of the Trump trade as markets prepare for a more volatile geopolitical environment and a resumption of the China trade war.“
The US currency jumped as much as 3.36% to 20.7720 Mexican pesos, a more than two-year high. It rose as much as 1.23% to 7.1860 yuan in offshore trading for the first time in almost three months. Mexico and China are among countries that stand to be hardest hit by Trump tariffs.
The euro fell as much as 1.92% to $1.0719 for the first time since 2 July. Sterling slipped as much as 1.35% to $1.2865.
The dollar added as much as 1.8% to 154.34 yen, the highest since 30 July.
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Republicans won control of the Senate, and made gains in the House of Representatives as the party battled to retain control there, raising the potential for a “Red Sweep”.
Deutsche Bank analysts wrote in a research note: “A potential unified government under President Trump would have the greatest degree of freedom for fiscal policy and would likely be the most dollar bullish outcome.
“But even without control of Congress, a Trump victory would be decidedly dollar bullish via the impact of tariffs and the dollar should especially outperform against high-beta currencies,” such as the Mexican peso and Australian dollar, they said.
The Australian dollar slid as much as 1.87% to a three-month trough of $0.6513.