Currency Market Reactions to Trump’s win: In an upset that defied the polls, outsider Donald Trump beat Hillary Clinton to become the 45th President of the United States, causing initial market panic which was quickly soothed by his reassuring victory speech.
Trump won key swing states including Florida, Ohio, and Pennsylvania, and his victory was sealed with a surprise win in Wisconsin which pushed him over the 270 electoral college votes needed to claim the presidency. Clinton then called Trump to concede defeat, but at the time of writing has yet to give her concession speech. Until that happens market reactions could sour.
Trump struck a gracious and presidential tone in his victory speech contrasting the no-holds-barred approach he took during the election. “Hillary has worked very long and very hard over a long period of time, and we owe her a major debt of gratitude for her service to our country.” The President-elect then called for the United States to “come together as one united people,” and vowed to be president for “all Americans”.
Currency Market Reactions
Just as our internal experts and global sources predicted, the markets initially reacted negatively to the Trump victory. However, Trump’s measured and cordial victory speech, and Clinton’s reportedly swift concession helped minimize the threat of seriously negative market reactions. Consequently there does not yet seem to be a repeat of the massive sell offs and foreign exchange rate turmoil that followed the Brexit results.
| USD | MXN/USD | CAD/USD | GBP/USD | JPY/USD | Gold | |
| Our Prediction | Down (against the majors) | Down (by as much as 8.6%) | Down | Up | Up | Up |
| Reality | Down (against the majors) | Down by 7.24% (from a high of 11.4%) | Down initially by about 1.79% (recovered to about 1.2%) | Up by 0.5% (from a high of 1.24%) | Up (by 1.87%) | Up 4% |
NOTE: Exchange rates change rapidly, especially when a global event in unfolding. All rates quoted were correct at their time of writing. For the latest rates use Continental’s Rate Watch
Read our predictions and analysis here: How the US Presidential Election Could Affect Exchange Rates
Japan’s Nikkey stock market index fell 5.4%, and the USD fell 2.6% against the yen (but recovered to 1.87% at the time of writing), and 1.6% against the Swiss Franc. The Euro hit its highest point in two months, and gold has enjoyed its single largest one day boost since Brexit. The odds of a US rate rise in December has decreased, but Trump has in the past spoke against the Fed’s low rates policy set by Janet Yellen – a democrat. Under his presidency rates could rise faster than expected eventually, thus strengthening the USD.
How Trump Won
With 97% of the polls reporting the popular vote was virtually even, with Trump winning 58.9 million votes, to Clinton’s 59 million, but due to the electoral college system Trump earned more electoral college votes . Both Clinton and Trump won about 48% of the total popular vote, with Gary Johnson in third with 3% and Jill Stein with 1%.
Crucially the Republican Party also won the US Senate and the House of Representatives, and will be able to appoint the next Supreme Court Justice. This means, in effect, that Republicans, led by Trump, will hold all three branches of government.
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