Trump trade "unleashed", Republican set for White House

The dollar surged as Donald Trump secured the presidency following a tightly contested U.S. election. U.S. media declared Trump the winner on Wednesday, overcoming Kamala Harris in a remarkable comeback that sent shock waves worldwide.

Trump trade "unleashed", Republican set for White House

Major swing states like Georgia, North Carolina, and Pennsylvania were projected in Trump’s favor. North Carolina was the first to be called for Trump, significantly reducing Harris’s path to victory. Georgia and Pennsylvania soon followed, making Trump the first president in over a century to win a non-consecutive second term. Trump’s platform includes tax cuts and tariffs—policies likely to drive inflation, posing potential challenges for the Federal Reserve ahead of its upcoming meeting. Rabobank analysts noted, "The 'Trump trade' dominated markets this morning, impacting stocks, bonds, FX, and crypto. Markets have anticipated that a second Trump administration would push for higher tariffs, permanent tax cuts, and deregulation, which could initially boost U.S. growth and inflation." Rabobank further commented that if Trump moves swiftly on tariffs, the Fed may end its easing cycle sooner than anticipated, responding to potential inflationary pressures. Additionally, an early immigration crackdown under Trump could further stoke inflation. Following the election news, the dollar surged broadly. Despite familiarity with Trump’s policies, markets remain uncertain about the scale of his initiatives.

Euro also dropped

The euro (€) dropped to $1.0712 on Wednesday afternoon in the U.K., down from $1.0898 on Tuesday, briefly dipping below $1.07 for the first time since June. The pound (£) fell to $1.2866 from $1.2996, with an intraday low of $1.2842—its worst since August, just above the $1.2845 low reached after the U.K. budget announcement. The pound strengthened slightly against the euro, climbing to €1.2008 from €1.1926. ING analysts noted a robust dollar across the board, with G10 currencies experiencing losses of around 1.0-1.7%, except for the Canadian dollar (C$), which dropped by less than 1%. This suggests a "Republican clean sweep" would favor the U.S. economy and benefit Canadian exporters, given their lower exposure to China-related tariffs and geopolitical tensions under Trump. The dollar rose to C$1.3941 against the Canadian dollar, from C$1.3871 on Tuesday, to A$1.5247 against the Australian dollar, from A$1.5083, and to ¥154.23 against the yen, from ¥151.93. It also strengthened against the Swiss franc (CHF), reaching CHF0.8757 from CHF0.8642.