Today, Donald Trump stunned the markets as he was declared the 45th president of the United States of America. The Republican amassed 276 electoral votes, passing the 270 needed. Meanwhile, Democratic nominee Hillary Clinton garnered 218.
This event had confounded hopes for a Democratic victory, which in turn, brought the dollar plunging against other major currencies as an initial reaction to Trump’s win. The greenback plummeted to a one-month low against the Japanese yen in particular.
As of writing, USD/JPY tumbled 1.60 or 1.54% to trade at 103.59. As markets have started to digest the US presidential results, the greenback has also begun to pare losses. Trump's first speech as President-elect seemed to calm the markets somewhat, much to everyone’s surprise.
The US Dollar Index is currently trading flat with measly movements upwards, ranging from 97.89 to 98.02.
On the given chart, USD/JPY had touched a one-month trough of 101.187 in Wednesday’s session . Before that, the pair could be seen with a sudden leap on November 7 , when Clinton was cleared of wrongdoing regarding the e-mail by the FBI. This event had cleared the cloud for the Democrat’s campaign, boosting chances for Clinton to win. A steady decline came prior November 7 during the FBI’s investigation of the said probe.
A Trump victory is viewed as negative for financial markets as his policies are source of uncertainty for the US economy and trade relations.
Earlier, Japan reiterated its willingness to interfere in currency markets with the safe-haven yen as Trump was closing in on winning the election in that period. Finance Minister Taro Aso mentioned on Tuesday that Tokyo will need to respond to moves in the currency markets should the US election results cause a sudden spike in the yen.
Chief Cabinet Secretary Yoshihide Suga also told reporters the Japanese government was on guard against excessive market volatility and would act if necessary.
Rapid gains in the yen—viewed as a safe haven asset in times of uncertainty such as today’s announcement US presidential results— have been a bother for Japanese policymakers concerned about the effect of excessive yen strength on Japan's rather brittle, export-reliant economy.
However, several analysts claimed it would be tough for Tokyo to intervene now because doing so could break a Group of 20 agreements to resist from competitive currency depreciation.
Trump seals the election with a win
Donald Trump received a call on Wednesday from Hillary Clinton to concede the presidential race, after he clinched victories in the states of Florida, North Carolina and Ohio. Clinton was the projected winner in Nevada and Virginia, meanwhile.
While Trump had more electoral votes, Clinton remained with more popular votes from US citizens. The Democrat had 59,169,894 votes, while the newly-elected president reaped 59,033,713 votes.
The Republican had certainly rattled the markets as the victory did not coincide with the media or the polls. As an initial reaction, the dollar came plunging. But like the greenback, world stocks and crude oil prices have recovered from the primary losses comparable to the declines during Brexit.
Trump had slightly stoked the tension of the markets with his speech, unexpectedly. "Now it's time for America to bind the wounds of division — have to get together," he said. "To all Republicans and Democrats and independents across this nation, I say it is time for us to come together as one united people."
Trump, who had been criticized by rivals for rhetoric branded as divisive and racist, vowed, "I will be president for all Americans, and this is so important to me."
However, despite the post-election recovery, this does not signal a permanent rebound for the currencies, energy and world stocks.
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