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07/11/2024 - 08:51 UTCThe dollar surged against most major currencies on Wednesday, with the dollar index (USDX) posting gains of 1.68% and hitting four-month highs after Republican Donald Trump won the U.S. presidential election, with policies on immigration, tax and trade expected to spur higher U.S. growth and inflation. Republicans also won a U.S. Senate majority. Control of the House of Representatives remains in question, with Republicans currently holding a majority.
Wall Street appears to be reacting positively to Trump winning the elections, with the three main stock indices surging to record highs. The US 500 gained 2.42%, the US tech 100 rose 2.69% and the US 30 surged 3.48% after the election results. Positive earnings from chipmaker Qualcomm provided an additional boost to the rally. Investors are now looking ahead to the Federal Reserve's interest rate decision for more cues on the central bank’s monetary policy path going forward with forecasts showing a 25-bps rate cut.
In other news, the Germany 40 that reflects the price of the DAX 40 future, declined by almost 1% as the threat of new tariffs looms over the euro zone, something that could pose a threat to economic growth and may also weaken the euro. Additionally, political turmoil in Germany, marked by the dismissal of Finance Minister Christian Lindner, could add further pressure to the European markets.
In the cryptos front, Bitcoin broke its all-time high of $73,932 and marked a new one at $76,462 as Donald Trump’s victory in the 2024 presidential election sparked sharp gains in cryptocurrencies on the prospect of friendlier crypto regulations. The overall crypto market capitalization stands at 2.63 trillion dollars from 2.54 trillion seen a week ago.
The focus for Thursday lies on the outcome of the Bank of England’s and Federal Reserve’s interest rate decision. Later on some price action could be seen upon the release of jobless claims.
The EUR/USD pair took a significant hit during the midweek market session, dropping over 1.80% and dipping below 1.0750—a level last seen in July.
This downturn reflects a shift toward the US Dollar as markets react to clear results from the ongoing US presidential election, positioning former President Donald Trump as the frontrunner.
Market data from the EU remains sparse this week. Key releases include Pan-European Retail Sales figures later today, the conclusion of the EU leaders’ summit on Friday, and an appearance by ECB President Christine Lagarde on Saturday.
In addition, all eyes are on the Federal Reserve's upcoming rate decision this week. Fed Chair Jerome Powell is anticipated to announce a 0.25% rate cut on Thursday, which would bring the Federal Funds Rate down to 4.75%.
Gold prices slid to a three-week low, falling below $2,700 per troy ounce on Wednesday following the 2024 US presidential election results.
Former President Donald Trump’s victory bolstered the US Dollar and pushed up Treasury yields, leading XAU/USD to drop over 2.5%.
With Trump’s win more decisive than anticipated, market uncertainty eased, and the Republican party solidified control of both the Senate and the House of Representatives. Looking ahead, the Federal Reserve is scheduled to announce its policy decision on Thursday.
Oil prices closed lower on Wednesday, as a strengthened U.S. dollar and the potential impact of President-elect Donald Trump’s foreign policy on global oil supply dominated market sentiment.
A stronger dollar typically dampens demand for dollar-denominated commodities, such as oil, by making them more expensive for international buyers.
Analysts suggest that Trump’s reelection could also revive sanctions on Iran and Venezuela, potentially restricting oil supply and supporting prices.
Additionally, Trump’s strong support for Israeli Prime Minister Benjamin Netanyahu could introduce further volatility in the Middle East, raising concerns about potential disruptions to global oil supply.
In domestic data, U.S. crude, gasoline, and distillate inventories increased last week, according to the U.S. Energy Information Administration (EIA).
U.S. stocks surged to record highs on Wednesday after Republican Donald Trump clinched a victory in the 2024 presidential race, marking a remarkable return to the White House.
All three indexes posted their highest single-day gains since November 2022, with the Nasdaq marking its biggest daily rise since February.
Trump’s win spurred a wave of "Trump trades," driving U.S. Treasury yields higher, with the 10-year note yield reaching a four-month high of 4.479%. `
Stocks poised to benefit from a Trump administration rallied including Tesla, which surged more than 14.50% as CEO Elon Musk has publicly supported Trump’s campaign.
The Fed is expected to lower the benchmark rate by 25 basis points at its meeting ending Thursday. However, traders have scaled back expectations for further rate cuts in December and next year, according to CME’s FedWatch Tool.
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