The failed assassination attempt on Donald Trump Friday night, during a campaign rally in Pennsylvania, by an unknown young man who apparently acted alone, has strengthened expectations of a Election victory of the former President against the current leader Joe Biden.
After months of the likely outcome being stuck on a “tie,” Trump had taken the lead in the last period, due to the clear signs of dementia in his rival and the TV debate totally unbalanced in favor of the tycoon. But what happened last weekend has the power to deliver an almost certain victory to the Republicans. Faced with this scenario, What changes from an economic and financial perspective?
How economic and monetary policy would change
If Trump wins the November election, a strengthening tax cutsespecially for businesses, and the increase in import data. During the last debates, Trump reiterated his vision of protectionism, and announced his willingness to impose a 10% duty on all imports.
A statement that would mean a greatest cost of important goods and, therefore, a inflation increasejust as price growth was gradually returning to the 2% target.
This would imply a new change (in a restrictive sense) of the monetary policy of the Fed, which last week had fueled expectations of a first rate cut in September and at least two cuts by 2024.
The dollar is already strengthening
As for the markets, this morning there was an immediate reaction on dollarwhich is returned to appreciate itself on the Forex market. The greenback in fact trades against the euro at 1.0902 (-0.19%) and against the pound at 1.2984 (+0.09%), benefiting from its nature as a safe haven together with the yen. The dollar/yen exchange rate stands at 157.885 (-0.17%).
Last Friday, the US currency had touched lowest in a monthdiscounting the possibility of a loosening of monetary policy (rate cuts) starting from September, thanks to the progress made by theinflation and the indications provided by the Chairman of the Fed Jerome Powell to Congress.
The dollar reversal would be attributed to bothwaiting for new tax cuts under a second Trump era, which would cause the US deficit to explode, both atimpact of tariffs on inflation, which would force the Fed to tighten the belt again.
Bitcoin soars above 63,000
Positive effect also on Bitcoinsince Trump is seen as more inclined to cryptocurrency market development compared to rival Biden.
Bitcoin thus reached a peak of $63,000 after the attack on Trump, marking a rise of more than 4%. Ethereum also soars to $3,366 (+4.87%), Binance to $562.89 (+4.48%) and Solana to $153.84 (+5.97%).
Wall Street opening awaited
European stock exchanges and Asian markets have shown some uncertainty, also increasing volatility, in the wake of what happened overseas. We are therefore looking at theWall Street Open Today which, according to the current trend of US futures, It could be positive.
But a period of great volatility is expected for the markets, due to the uncertainties for the evolution of the political situation in the United States, and the uncertainty-volatility combination will certainly not do the stock markets any good, which could suffer after having updated their historical highs in the first half of 2024.