US Dollar and Bitcoin Surge as Investors Anticipate Trump Victory

The U.S. dollar and stock index futures experienced notable increases, while Bitcoin reached record highs, as investors anticipated a victory for Donald Trump in the presidential race. The dollar index, which measures the U.S. currency against six other major currencies, surged by 1.8% to 105.22, its highest level since July. The euro fell to a four-month low, losing 1.92% to 1.0720 dollars, while the British pound dropped by 1.42% to 1.2856 dollars. The Japanese yen also weakened, losing 1.82% and trading at 164.25 yen per dollar.

The U.S. dollar's rise is attributed to expectations that Trump's proposed policies, including curbing immigration, cutting taxes, and imposing high tariffs on imports, will likely exacerbate inflation. This would limit the U.S. Federal Reserve's ability to lower interest rates, which had already begun in September. The dollar also appreciated against the Chinese yuan by more than 1%, prompting Chinese banks to sell dollars in an attempt to stabilize the local currency.

U.S. stock futures saw solid gains as Wall Street awaited Trump's tax cuts and promises of reduced corporate regulation. The Dow Jones Industrial Average futures rose by 1.68% or more than 700 points, the S&P 500 futures increased by 1.55%, and the Nasdaq futures climbed by 1.46%.

Trump’s economic policies, including imposing high tariffs on imports from China and Europe, are expected to accelerate inflation further, potentially adding pressure on the U.S. fiscal deficit. This would likely lead to more government debt issuance to cover the deficit, flooding the market with bonds and pushing bond yields to new highs. As a result, the 10-year U.S. bond yield reached a four-month high of 4.433%, the two-year note hit 4.309% (the highest since August), and the 30-year bond yield peaked at 4.5943%, briefly hitting its highest level since July.

Meanwhile, the cryptocurrency market also rallied, with Bitcoin climbing more than 7% to a new all-time high of 75,320 dollars. Investors expect that under Trump’s leadership, there will be greater support for digital currencies compared to the policies under Vice President Kamala Harris.