NAIROBI, Kenya – The U.S. dollar surged to a four-month high following Donald Trump’s victory in the presidential election, signaling renewed expectations for growth and inflation under his policies.
Trump defeated incumbent Vice President Kamala Harris, marking his return to the White House as Republicans also took control of the Senate.
With the House of Representatives still in play, a full Republican sweep could pave the way for significant legislative shifts, likely influencing market dynamics even further.
The dollar index climbed by 1.66% to 105.09, reaching levels last seen in early July.
Meanwhile, the euro dropped 1.78% to $1.0735, hitting a four-month low, while the yen fell 1.92% to 154.5 per dollar.
Traders suggest these movements reflect market sentiment that a Republican-controlled government could push through changes in tax, trade, and immigration policies, which are widely expected to spur economic growth and inflation.
Economists point to potential new tariffs and tightened immigration policies as measures that could boost U.S. demand but also strain international trade relations.
The eurozone, Mexico, Canada, and China could be among the regions most affected by Trump’s approach to trade, which may strain their economies and widen the interest rate gap with the U.S., adding pressure on their currencies.
The prospect of higher U.S. inflation might lead the Federal Reserve to slow the pace of rate cuts, adding upward momentum to the dollar.
“This could push inflation higher, leading the Fed to ease more slowly—an outcome that favors the dollar,” noted Nikos Tzabouras, senior market specialist at trading platform Tradu.
Despite market confidence, Trump’s preference for a weaker dollar could complicate the currency outlook long-term.
A weaker dollar could bolster U.S. exports, aligning with Trump’s pro-manufacturing stance but potentially tempering the dollar’s current rise.
“Trump has historically favored a weaker currency to aid exports, which could pose challenges to the dollar in the longer term if such policies are implemented,” Tzabouras added.
Germany’s political shifts added to European market uncertainty, with Chancellor Olaf Scholz dismissing Finance Minister Christian Lindner amid ongoing budget disputes.
This upheaval, combined with Trump’s tariff rhetoric, weighed heavily on the euro.
The yen, which touched its weakest level since July 30, may soon test levels that prompted Japanese government intervention earlier this year.
Japan’s Chief Cabinet Secretary Yoshimasa Hayashi has already signaled increased vigilance over speculative currency moves as the yen remains pressured by the strengthening dollar.
Trump’s policies also buoyed cryptocurrency markets, with bitcoin rallying over 10% to a record high of $76,134 on Wednesday, attributed to Trump’s favorable views on digital assets.
Trump defeated incumbent Vice President Kamala Harris, marking his return to the White House as Republicans also took control of the Senate.
With the House of Representatives still in play, a full Republican sweep could pave the way for significant legislative shifts, likely influencing market dynamics even further.
The dollar index climbed by 1.66% to 105.09, reaching levels last seen in early July.
Meanwhile, the euro dropped 1.78% to $1.0735, hitting a four-month low, while the yen fell 1.92% to 154.5 per dollar.
Traders suggest these movements reflect market sentiment that a Republican-controlled government could push through changes in tax, trade, and immigration policies, which are widely expected to spur economic growth and inflation.
Economists point to potential new tariffs and tightened immigration policies as measures that could boost U.S. demand but also strain international trade relations.
The eurozone, Mexico, Canada, and China could be among the regions most affected by Trump’s approach to trade, which may strain their economies and widen the interest rate gap with the U.S., adding pressure on their currencies.
The prospect of higher U.S. inflation might lead the Federal Reserve to slow the pace of rate cuts, adding upward momentum to the dollar.
“This could push inflation higher, leading the Fed to ease more slowly—an outcome that favors the dollar,” noted Nikos Tzabouras, senior market specialist at trading platform Tradu.
Despite market confidence, Trump’s preference for a weaker dollar could complicate the currency outlook long-term.
A weaker dollar could bolster U.S. exports, aligning with Trump’s pro-manufacturing stance but potentially tempering the dollar’s current rise.
“Trump has historically favored a weaker currency to aid exports, which could pose challenges to the dollar in the longer term if such policies are implemented,” Tzabouras added.
Germany’s political shifts added to European market uncertainty, with Chancellor Olaf Scholz dismissing Finance Minister Christian Lindner amid ongoing budget disputes.
This upheaval, combined with Trump’s tariff rhetoric, weighed heavily on the euro.
The yen, which touched its weakest level since July 30, may soon test levels that prompted Japanese government intervention earlier this year.
Japan’s Chief Cabinet Secretary Yoshimasa Hayashi has already signaled increased vigilance over speculative currency moves as the yen remains pressured by the strengthening dollar.
Trump’s policies also buoyed cryptocurrency markets, with bitcoin rallying over 10% to a record high of $76,134 on Wednesday, attributed to Trump’s favorable views on digital assets.
