The currency market is in turmoil this Wednesday morning, with the euro falling sharply against the US dollar. As the results of the US presidential election indicate a possible victory for Donald Trump, the market reacts intensely. The euro lost 1.80% against the dollar, reaching $1.0737, while the Bloomberg Dollar Spot index jumped 1.7%, marking its highest level in a year. This fall reflects the uncertainty and anticipations surrounding the expected economic policy in the event of Trump's return to the presidency.
The rise of the dollar supported by the electoral results
At this stage of the count, Donald Trump would have obtained 265 electors, placing himself ahead of Vice-President Kamala Harris, credited with 194 electors. Key states, such as North Carolina, Pennsylvania and Georgia, swung in favor of the Republican candidate, consolidating his lead in this decisive race. With only five electoral votes needed to reach the threshold of 270 required for victory, Trump's path to the White House appears all but assured.
“Even if the counts are still underway in some important states, it would take a small miracle for Donald Trump to lose and Kamala Harris to win,” underlines Commerzbank. This almost decided scenario prompted investors to massively reposition themselves in favor of the dollar, strengthening the American currency on all fronts. At the same time, the USD/CHF pair is now trading at 0.8733, close to its daily peak of 0.8755.
The economic outlook with Trump in the White House
Markets are already anticipating major changes in US economic and fiscal policies under a Trump administration. The Republican president has promised to cut taxes and increase tariffs on imports, measures that are expected to put pressure on US inflation. According to Priya Misra, portfolio manager at JPMorgan Investment Management, “Trump's tariff and tariff plan is expected to lead to higher inflation and deficits, which should translate into higher long-term rates.” term”. These expectations are pushing investors to favor the dollar as a safe asset in the face of a likely rise in interest rates, making the American currency more attractive.
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