The U.S. Dollar is trading at its strongest levels since October 2023 following a night in which Donald Trump was elected as the 47th President of the United States
Overview
S&P 500 futures overnight climbed over 2.0%, 30-year treasury yields as well as the Buck experienced their biggest upward swing since 2020. Markets are certainly welcoming the news after weeks of investors and traders jumping into “Trump trades,” which have seen the value of Bitcoin and Musk-owned stocks rise dramatically in the last few hours.
Other predictable movements have occurred such as the Mexican Peso dropping by as much as 3.0% at one point when results of the election were being announced. It was the quickest drop for MXN since 2016. Additionally, Emerging-Markets and their respective currencies have also dwindled as expected. Trump promises to impose tariffs, so all nations are hoping to be able to adjust.
Overall, the fact that we will not have to wait for results much longer makes it clear who will be coming in and while a lot has been said, it is important to remember that not all campaign proposals find ways of materializing. There could be friction to large tax cuts the Trump administration wants if Congress is split. We shall see how in the next few days concepts and plans are put together to have clearer guidance. For now, a tremendous boost to the American Dollar. Fed decision announcement will be tomorrow 2PM.
What to Watch This Week…
- Fed Meeting and Presser Thursday 2PM
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
MXN ⇓
The Mexican Peso dropped to its lowest value since August 2022 as the Trump victory could mean a renegotiation of the USMCA (NAFTA 2.0) trade agreement. Furthermore, other barriers in the form of tariffs as well as a potential percentage fee from remittances headed to Mexico. We have been talking a lot about the gloom and doom scenario, but it is important to recall that Trump was also expected to not get along with previous Mexico’s President AMLO and yet they carried on in friendly terms. There is volatility to be had, but at least now the supply-chains for both countries can concentrate on something other than awaiting votes.
EUR ⇓
The Euro fell to its weakest point since the end of June as the results of the U.S. election put pressure on all currencies while U.S. treasury yields climbed to fresh highs. Data-wise, the Euro-zone keeps on seeing improvements as October’s reading of the Purchasing Managers Index composite came in at 50.0, marking an expansion thus defying the expectation for contraction in the survey. Suppliers are also experiencing lower prices with the September Producers Price Index falling (-0.6%) after they grew by as much in August. We get more economic data to chew next week that could lift the shared currency back up after the turbulence from election week fades.
