The US Dollar strengthened to a near 1- year high on Wednesday with markets pricing in Donald J Trump’s victory in the 2024 elections.
- •The dollar, as measured by the DXY Index, has gained 1.7% to trade at a 3-month high, above the 105 mark while Bitcoin touched an all time high, edging higher 8.7% above the US$74,300 mark.
- •Contrastingly, Gold edged slightly lower by 1.4% at US$2706 per ounce with oil ranging at the US$74 mark amid the stronger dollar.
- •The greenback strengthened against currencies of countries potentially affected by Trump’s high tariffs policy including the Euro, Japanese Yen and the Mexican Peso.
The Euro slid to a 4-month low, the Yen fell to a 3-month low with the Mexican peso plummeting to 2022 levels. While Trump has advocated for a weaker dollar, his policies are likely to drive up inflation and economic growth, prompting the Fed to keep rates higher, in turn boosting the dollar.
With higher interest rates, borrowing costs and treasury yields are expected to remain elevated despite the worrying growing government debt in the US and the bulging deficits.
Yields on the US treasuries soared with the benchmark 10-year paper rising 18 basis points to 4.47% – highest since July. The 2- year paper saw yields rise about 5 basis points to 4.31%. The 30-year paper saw the highest single day increase of 23 basis points since 2020 mirroring a change in market dynamics.
Trump claimed victory after securing a decisive lead with 266 electoral votes while also winning the popular vote, capturing the swing states including Pennsylvania, Wisconsin, Nevada, North Carolina, Arizona and Georgia.
A Trump’s presidency is expected to have softer regulation on cryptocurrency, steering the crypto market higher. On Wednesday, Bitcoin rallied to an all time high of US$74,300.
The Federal Reserve is expected to give an interest rate review on Thursday with the US inflation rate still hovering above the Fed’s threshold.
