Donald Trump’s almost certain victory in the US presidential election has sent the dollar soaring towards its biggest one-day rise, while cryptocurrency traders pushed bitcoin to a fresh all-time high.
The likelihood that the Republicans would also grab a majority in the Senate and the House of Representatives, giving Trump sweeping powers to cut taxes and impose tariffs on imported goods, was also judged as a positive for the US currency even before some states had given their verdict.
Trump declared victory on Wednesday morning after taking the key swing state of Pennsylvania. The Republican led his Democrat rival, Kamala Harris, by 267 electoral votes to her 224, 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 1.25% as of 0900 GMT, having earlier hit a four-month peak.
Trump’s tariff and immigration policies were seen as inflationary by analysts, buoying up the dollar.
Bitcoin climbed as much as 9% at one point to reach a record $75,389, before falling back below $74,000. 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.
US stock markets are expected to follow the same upward path when they open later in the day, despite concerns that higher inflation would force the US Federal Reserve to scrap plans to cut interest rates, keeping them higher than previously expected.
James Knightley, the chief international economist at ING, said lower taxes after a Trump victory should boost consumer and business sentiment and lift spending in the near term.
“However, promised tariffs, immigration controls and higher borrowing costs will increasingly become headwinds through his presidential term,” he said.
The dollar 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 hit hardest by Trump tariffs.
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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.
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.
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