Written by Convera’s Market Insights team
Dollar stands tall with Trump
Donald Trump has won the US presidential election after one of the most polarised contests in the nation’s history. The outcome ends a volatile White House race that saw Trump face two assassination attempts, a criminal conviction and a last-minute change of his Democratic opponent.
The president-elect gained ground on the Democrats in 48 of the 50 states in the union, sweeping past Harris in the “blue wall” of Midwestern states. Trump reached the 270-electoral college vote threshold to return to office by winning Wisconsin. The Republicans recaptured the Senate and eye unified power with by keeping their majority in the House. A unified Republican grip on Washington would set the course for Trump’s agenda of a promised mixture of tariffs and tax cuts, which could feed inflation and put upward pressure on US interest rates.
Given the run-up in the US dollar in October, a Red Sweep scenario is likely needed for the dollar to push on much higher. Nevertheless, the surge in the buck today has seen the US dollar index rise as much as 1.8%, and if that gain holds it will be the gauge’s biggest jump since March 2020.
Shockwaves across asset classes
Investors have been preparing for significant whiplash across assets amid a tight US election, and indeed a wave of trades around the world, tied to Trump winning, has already triggered some decisive moves in financial markets.
Commodities are down due to trade and foreign policy prospects. Bitcoin is at a new all-time high and S&P 500 futures have extended their advance to more than 2% on Trump’s pro-growth policies. Treasury yields are higher across the board as expectations for inflation under a Trump administration surged, but money markets continue to nearly fully price a 25-basis point rate cut from the Federal Reserve (Fed) at Thursday’s policy decision. There’s currently a 60% probability priced in of another such reduction by the December meeting.
Abroad, bonds are diverging from Treasuries, adding to the dollar’s yield allure. The US’s trading partners can expect Trump to impose steep tariffs on a much broader scale than in his first term, which could shock the global economy and strain ties with allied governments in Europe, Asia and Latin America. As such, everything other than the Canadian dollar is down at least 1% across the G10 space with the euro suffering the most – down over 1.6% on the day. The Mexican peso dropped as much as 3% at one stage today, given its exposure to tariff risks.
CAD riding the USD bull wave
Table: 7-day currency trends and trading ranges
Key global risk events
Calendar: November 4-8
All times are in BST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
