US poll: Dollar soars, bitcoin hits record high as traders bet on Trump
The dollar rose and bitcoin reached a new high Wednesday as traders bet on Donald Trump's victory in key swing states necessary to win the presidency, increasing bets on new tax cuts, tariffs, and rising inflation.While polls had shown the race to be close, as results came in, the Republican appeared to be ahead of his Democratic opponent, Vice President Kamala Harris.
Both candidates won expected victories in safe states, but signs that the business magnate was on track for a second term boosted the so-called Trump trade.
The tycoon won Georgia and North Carolina, with others still undecided, and US networks declared him the winner in key battleground Pennsylvania, with Fox News calling the election in his favor.
The news that the former president's party had won control of the Senate boosted the prospect of large-scale tax cuts, higher tariffs, and deregulation, all of which are expected to boost the dollar.
The dollar surged 1.5 percent to 154.33 yen, its highest level since July, while also rising more than one percent against the euro and more than three percent against the Mexican peso.
Bitcoin surged more than $6,000 to a record $75,371.69, 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 billionaire Elon Musk to oversee a comprehensive audit of government waste.
"The price of bitcoin has closely followed Trump's position in the polls and betting markets," Russ Mould, an analyst at AJ Bell, said ahead of Tuesday's US election.
Some investors are "potentially taking the view that a Republican victory would lead to a surge in demand for the digital currency" , according to him.
Analysts believe a clean sweep of Congress and the White House for Trump and Republicans would boost the dollar and Treasury yields due to his plans to cut taxes and impose tariffs on imports.
Republican control of the Senate and House "could result in major spending or tax policy changes. Still, Stephen Innes of SPI Asset Management believes that congressional gridlock could be the ultimate volatility suppressor.
And Peter Esho, economist and founder of Esho Capital, stated, "The markets are scrambling to figure out what happens next, but for the time being, the market is pricing in a higher growth and inflation outlook."
Such an outcome could cause problems for Federal Reserve Chairman Jerome Powell as he continues his battle to keep inflation under control, given that Trump's plans are considered inflationary.
The election comes as the central bank prepares to deliver its latest policy decision on Thursday, with expectations that interest rates will be cut by 25 basis points, down from 50 in September.
The dollar's surge against the yen boosted stocks in Tokyo by more than three percent at one point, owing to gains in exporters, while markets in Sydney, Singapore, Taipei, Mumbai, and Bangkok also rose.
However, losses were reported in Shanghai, Seoul, Wellington, Manila, and Jakarta.
Hong Kong was also down significantly, dropping nearly 3% at one point, due to concerns about the impact of a Trump presidency on China's economy and relations between Beijing and Washington.
Traders were given a strong lead by Wall Street, where all three major indexes rose more than 1%.
While the election results are being closely watched around the world, they are of particular interest in China, where Trump has promised to escalate a trade war with the economic powerhouse by imposing massive tariffs on Chinese goods.
The vote comes as Chinese leaders meet to finalize a package of stimulus measures aimed at reviving growth and supporting the country's massive real estate sector, which is mired in a crippling debt crisis.
- Key figures at 0710 GMT -
Dollar/yen: Up to 154.21 yen from 151.60 on Tuesday.
Euro/dollar: Down to $1.0711 from $1.0930.
Pound/dollar: Down to $1.2853 from $1.3035.
Euro/pound: 83.32, down from 83.82 pence.
Tokyo - Nikkei 225: UP 2.6% at 39,480.67 (close).
Hong Kong - Hang Seng Index: DOWN 2.6% at 20,467.69
Shanghai - Composite: DOWN 0.1% at 3,383.81 (close)
West Texas Intermediate: Down 1.9 percent to $70.59 per barrel.
Brent North Sea Crude: Down 2.0 percent to $74.03 per barrel.
New York - Dow: Up 1.0 percent to 42,221.88 (close)
London - FTSE 100: Down 0.1% at 8,172.39 (close)
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