Markets Focus on Trump Victory: Dollar Index Reaches Highest Point in 4 Months
The Dollar Index (DXY) began to record its largest daily increase against major currencies since March 2020 today. This rise is associated with Trump's election victory.
The surge of the US dollar started with early signs of election results in Georgia and gained momentum throughout US trading hours. The Dollar Index increased by 1.55% against six major currencies, rising to 105.39. This marked a four-month high for the Dollar Index. Analysts believe that the dollar has found support due to the inflationary effects of Trump’s tariffs and immigration policies.
Markets are pricing in Trump's victory. The Republican candidate Donald Trump's win in the presidency led to a sharp rise in the dollar and an increase in US Treasury yields. Amanda Sundstroem from SEB Research notes that it will take time for the election results to finalize. The strategist indicated that this process will shape the market's assessment of growth, inflation, and monetary policy impacts.
With the rise of the dollar, Bitcoin also reached record levels. Following increased chances of Trump winning the election, which he stated would clearly support cryptocurrencies, Bitcoin recorded over a 10% increase from yesterday and reached a record level of $75,407.
However, currencies such as the Mexican peso and Chinese yuan may also be affected by Trump’s policies. The US dollar gained value against the Mexican peso, rising by 3.36%, while it increased by 1.23% against the Chinese yuan in offshore trading.
Geopolitical uncertainties and currency movements. Markets are preparing for a more volatile geopolitical environment and the possibility of a renewed China trade war. Deutsche Bank (DB) analysts note that a potential Trump administration would have a broad scope for fiscal policy and that the dollar could strengthen significantly against currencies such as the Mexican peso and Australian dollar.
While Pimco economists anticipate that the economic impacts of the new US president's policies will remain uncertain for a while, they suggest that a clearer picture may emerge in some areas. They indicate that topics such as open budgets, extensions of tax cuts, and ongoing US-China tensions will be on the agenda while expecting the Fed to maintain its independence. However, it is stated that clarifying details related to budget and foreign policy could take months.