As expected, Donald Trump has been elected the next President of the United States. Surprisingly, he won by a significant margin, securing a victory in the Electoral College, the popular vote, and both the Senate and House of Representatives. This positions Trump for a strong start to his administration next year.

Trump's victory has caused considerable volatility in financial markets. U.S. stocks, the U.S. Dollar Index, and gold prices have all risen. However, the largest gains have been seen in Bitcoin, which surged from under $70,000 during the election to nearly $100,000—a rise of over 40%. This may be related to Trump's preference for deregulation and greater acceptance of virtual currencies.

With the Republican Party controlling both the Senate and the House, Trump will have an easier time implementing his policies. However, this is not guaranteed, as the policies must also gain support within his party.

The market's main concern is tariffs, especially those targeting China. The nominee for Secretary of State, Marco Rubio, is known for his strong anti-China stance, and markets anticipate a deterioration in U.S.-China trade relations. China has already begun taking measures in response. The Chinese yuan has fallen to 7.25 against the dollar under the strong dollar trend. If it breaks through the 7.35 support level, many in the market expect it to depreciate further to around 7.7.

Before Trump officially takes office, the Russia-Ukraine war has intensified. Western nations led by the United States have agreed to allow Ukraine to use long-range missiles against targets in Russia. Russia has responded with advanced weaponry. This escalation in geopolitical tensions has driven demand for safe-haven assets, contributing to the dollar’s rise.

Another focus for markets is whether Trump can effectively address the Russia-Ukraine conflict. This issue will influence the future of U.S.-EU relations, determining whether they grow closer or drift apart, which in turn affects the global political landscape.

Additionally, Federal Reserve Chair Jerome Powell has recently taken a cautious stance on rate cuts. Combined with concerns that inflation might rise under Trump’s administration, the yield on 10-year U.S. Treasury bonds remains near 4.5%. This has supported a stronger U.S. Dollar Index, which briefly broke through the key resistance level of 107 to reach 108. However, at the time of writing, it has fallen back within its previous range, warranting further careful observation.

Ultimately, Trump is not a strong supporter of a robust dollar or high interest rates. If he succeeds in bringing businesses back to the U.S., exchange rates will be a critical factor in maintaining trade competitiveness.

The dollar’s fundamentals indeed have an advantage, and its monetary policy may remain more cautious compared to other economies. This places the dollar in a favorable position in the short term. However, this does not necessarily mark the beginning of a strong unilateral rally, so excessive optimism toward the dollar is unwarranted.

Patrick Law

Chief Operating Officer of Hantec Group