The dollar rose and bitcoin reached a new high Wednesday as speculators gambled on Donald Trump’s triumph after he picked up two critical swing states required to win the presidency, increasing wagers on new tax cuts, tariffs, and more inflation.
While polls had indicated the race to be close, when results came in, the Republican seemed to be ahead of his Democratic opponent, Vice President Kamala Harris.
Both candidates scored predicted victories in safe areas, but signs that the business magnate was gaining ground fueled the so-called Trump Trade.
While many critical swing states were too close to call, Trump took Georgia and North Carolina, with others still undecided.
The news that the former president’s party had taken control of the Senate enhanced the likelihood of large-scale tax cuts, higher tariffs, and deregulation, all of which are expected to benefit the dollar.
The dollar surged 1.5 percent to 154.33 yen, its best level since July, while also rising more than one percent against the euro and more than three percent against the Mexican peso.
Bitcoin surged nearly $6,000 to a record $75,330.88, surpassing its previous high of $73,797.98 in March.
Trump has promised to make the United States the “bitcoin and cryptocurrency capital of the world” and to appoint tech entrepreneur 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,” Russ Mould, an analyst at AJ Bell, said ahead of Tuesday’s US election.
Investors are “potentially taking the view that a Republican victory would lead to a surge in demand for the digital currency”, he added.
Analysts said a clean sweep of Congress and the White House for Trump and Republicans would likely boost the dollar and Treasury yields owing to his plans to cut taxes and impose tariffs on imports.
Republican control of the Senate and House “could bring sweeping spending or tax policy shifts. Still, congressional gridlock could be the ultimate volatility suppressor”, said SPI Asset Management’s Stephen Innes.
And Peter Esho, economist and founder at Esho Capital, said: “The markets are scrambling to figure out what happens next, but for the time being, the market is pricing in a higher growth and higher inflation outlook.”
Such an outcome could provide a headache for Federal Reserve boss Jerome Powell as he continues his battle to bring inflation to heel, with Trump’s plans considered inflationary.
The election comes as the central bank prepares to deliver its latest policy decision Thursday amid expectations it will cut interest rates by 25 basis points, having lowered them by 50 points in September.
The dollar’s surge against the yen rallied stocks more than three percent in Tokyo at one point thanks to gains in exporters, while Shanghai, Sydney, Singapore, Taipei, Mumbai and Bangkok also rose.
However, there were losses in Seoul, Wellington, Manila and Jakarta.
Hong Kong was also well down — at one point diving almost percent — on worries about the impact of a Trump presidency on China’s economy and relations between Beijing and Washington.
Traders had been given a strong lead from Wall Street, where all three main indexes climbed more than one percent.
While the result of the election is being closely followed globally, it is of real interest in China after Trump vowed to ratchet up a trade battle with the economic titan by imposing massive tariffs on goods from the country.
The vote comes as Chinese leaders hold a key meeting to hammer out a package of stimulus measures aimed at kickstarting growth and providing support to the colossal property sector, which is mired in a painful debt crisis.
– Key figures around 0620 GMT –
Dollar/yen: UP at 153.85 yen from 151.60 yen on Tuesday
Euro/dollar: DOWN at $1.0746 from $1.0930
Pound/dollar: DOWN at $1.2884 from $1.3035
Euro/pound: DOWN at 83.41 from 83.82 pence
Tokyo – Nikkei 225: UP 2.4 percent at 39,405.19 (close)
Hong Kong – Hang Seng Index: DOWN 2.0 percent at 20,585.45
Shanghai – Composite: UP 0.4 percent at 3,400.69
West Texas Intermediate: DOWN 1.8 percent at $70.73 per barrel
Brent North Sea Crude: DOWN 1.8 percent at $74.19 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)