By Kevin Buckland
TOKYO (Reuters) -The dollar was set for its biggest one-day rise since March 2020 against major peers on Wednesday and bitcoin jumped to an all-time high as so-called “Trump trades” took off, with traders increasingly betting on a U.S. election victory for the former president.
Republican Donald Trump led Democrat Kamala Harris by 247 electoral votes to 210, after Trump took the key battleground state of Georgia, based on projections from Edison Research. 270 electoral votes are needed to win the presidency.
Several other crucial states remain in the balance, including Pennsylvania, which has 19 electoral votes.
The U.S. currency’s climb began after very early indications of a Republican win in Georgia and gathered pace throughout the day.
The dollar index – which measures the currency against six major peers including the euro and yen – advanced 1.63% to 105.04 as of 0615 GMT, and was earlier as high as 105.19, a four-month peak. That put it on course for its best day since March 2020.
Trump’s tariff and immigration policies are seen as inflationary by analysts, buoying the dollar.
Bitcoin climbed as much as 8.63% to reach a record $75,120. Trump is seen as more actively supportive of cryptocurrencies than Harris.
“Although there are still votes left to count, as Trump nears a victory, the USD index has picked up steam,” said James Kniveton, a senior corporate forex dealer at Convera.
“Trade-related currencies are likely to face the brunt of the Trump trade as markets prepare for a more volatile geopolitical environment and a resumption of the China trade war.”
The U.S. currency jumped as much as 3.36% to 20.7720 Mexican pesos, a more than two-year high. It rose as much as 1.23% to 7.1860 yuan in offshore trading for the first time in almost three months. Mexico and China are among countries that stand to be hardest hit by Trump tariffs.
The euro fell as much as 1.92% to $1.0719 for the first time since July 2. Sterling slipped as much as 1.35% to $1.2865.
The dollar added as much as 1.8% to 154.34 yen, the highest since July 30.
Republicans won control of the Senate, and made gains in the House of Representatives as the party battled to retain control there, raising the potential for a so-called “Red Sweep”.
“A potential unified government under President Trump would have the greatest degree of freedom for fiscal policy and would likely be the most dollar bullish outcome,” Deutsche Bank (ETR:DBKGn) analysts wrote in a research note.
“But even without control of Congress, a Trump victory would be decidedly dollar bullish via the impact of tariffs and the dollar should especially outperform against high-beta currencies,” such as the Mexican peso and Australian dollar, they said.
The Aussie slid as much as 1.87% to a three-month trough of $0.6513.
