Wednesday, November 6, 2024 - The dollar surged and bitcoin reached a new record high Wednesday, November 6, as traders increasingly bet on a Donald Trump victory in the U.S. presidential race. Trump picked up wins in critical swing states, ramping up expectations of fresh tax cuts, tariffs, and inflation-driving policies that favor the greenback.
Despite pre-election polls predicting a tight race, Trump
appeared to be outpacing his Democratic rival, Vice President Kamala Harris, as
votes were counted. His wins in key states such as Georgia and North Carolina
fueled a market rally driven by the so-called "Trump Trade."
The dollar gained 1.5% to hit 154.33 yen, the highest level
since July, while it also rose more than 1% against the euro and over 3%
against the Mexican peso. Bitcoin surged nearly $6,000, reaching a record
$75,330.88, surpassing its previous peak of $73,797.98 in March.
Trump's campaign promises to establish the U.S. as the
“bitcoin and cryptocurrency capital of the world” and his intention to appoint
tech billionaire Elon Musk to lead an audit of government waste have spurred
investor enthusiasm in digital currency markets. Analysts noted that bitcoin’s
price has mirrored Trump’s polling numbers, with a Republican victory
potentially fueling further demand for digital assets.
A clean Republican sweep of Congress and the White House is
expected to boost the dollar and Treasury yields, particularly due to Trump’s
tax cut and tariff plans. However, such policies may increase inflation,
potentially complicating efforts by Federal Reserve Chair Jerome Powell, who
has been focused on bringing inflation under control.
In anticipation of election-driven volatility, global
markets saw mixed reactions. Tokyo's Nikkei jumped more than 3% as exporters
benefited from the weaker yen, while Shanghai, Sydney, Singapore, and other
Asian markets also posted gains. Meanwhile, Hong Kong’s Hang Seng Index dropped
2% amid concerns over U.S.-China trade relations under a potential Trump
presidency.
China remains closely attuned to the election's outcome, as
a Trump win could intensify trade tensions, with tariffs potentially affecting
its economy. The election coincides with a critical meeting of Chinese leaders
who are strategizing economic measures to support growth, especially as the
country’s property sector faces a debt crisis.
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