Trump's victory leads to a surge in Dollar, Euro tumbles

7 Nov 2024 , 09:57 AM

Following Republican Donald Trump’s victory in the U.S. presidential election, the dollar surged to a four-month high on Wednesday. Trump’s trade, tax, and immigration plans are anticipated to boost inflation and U.S. economy.

In addition to Republicans gaining a majority in the U.S. Senate, Trump defeated Democratic Vice President Kamala Harris to recapture the White House. Republicans presently possess a majority in the House of Representatives, but control of the chamber is still up for debate.

A complete Republican sweep would enable the party to enact more significant legislation, which would probably lead to more significant currency movements.

Trump’s plans of deregulation, lower taxes, additional tariffs, and restrictions on illegal immigration may increase inflation and growth while impeding the Fed’s ability to lower interest rates.

Potential new tariffs are seen as a threat to the euro zone, Mexico, China, and Canada, which could hinder regional economic growth. Their currencies would suffer and their interest rate differences with the US would grow as a result.

The political unpredictability in Germany could potentially be a burden for the euro.

After weeks of arguing over the government’s economic course, German Chancellor Olaf Scholz fired Finance Minister Christian Lindner on Wednesday.

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