The dollar is expected to record its biggest one-day gain since March 2020 against a major currency on Wednesday, while Bitcoin surged to an all-time high after Donald Trump was re-elected president, with Republicans also winning the Senate and adding seats in the House of Representatives.
The strengthening of the US currency began after early signs of a Republican victory in Georgia, and it continued throughout the morning in Europe.
The US dollar index, which measures the currency against six major currencies, jumped 1.8% to 105.16, a four-month high. This puts it on track for the best day since March 2020.
Trump's fiscal policy, tariffs, and immigration are considered by analysts as inflationary factors, strengthening treasury yields and subsequently the US dollar.
"The expected reaction is already visible, a sharp increase in the dollar," said Niels Christensen, chief analyst at Nordea.
"Expectations of looser fiscal policy and a tight labor market point to higher inflation and yields."
The 10-year US treasury bond yield rose 17 basis points to 4.44571%, a four-month high.
Mexico and China are among the countries most likely to be affected by Trump's possible tariffs.
The euro slipped as much as 1.9% to $1.0702, its lowest level since June 28. Pound Sterling slipped 1.3% to $1.2873.
The US dollar rose to 154.38 yen, its highest level since July 30, and was last at 153.92.
Japan's Chief Cabinet Secretary, Yoshimasa Hayashi, said on Wednesday that the government intends to monitor movements in the foreign exchange market, including speculative movements, with a higher level of concern.
Bitcoin rose by 8.6% to reach a record $75,389. It was last up around 7.5% at $74,361. Trump is seen as more supportive of crypto than Harris.
Republicans also won control of the Senate and added seats in the House of Representatives, increasing the potential for a so-called “Red Sweep
"The likelihood of a Republican 'Red Sweep' is quite high, and this means more aggressive fiscal policy," said Kirstine Kundby-Nielsen, FX analyst at Danske Bank.
"A more aggressive fiscal policy and an 'America first' approach will support US assets, including the US dollar," added Kundby-Nielsen.
