U.S. dollar is little changed on Tuesday night as presidential election winds down
The U.S. dollar strengthened against the Mexican peso and other major global currencies Wednesday as presidential election results pointed to a Donald Trump victory.
The greenback gained 2.6% against the Mexican peso, hitting its highest level since 2022. The dollar was also higher against the Swiss franc, Japanese yen and Chinese yuan. The ICE U.S. Dollar Index rose 1.4%, hitting its highest level since July.
The euro fell to $1.0757 against the dollar and hit its lowest level since late June.
The U.S. currency's gains extended as results came in favor of former President Trump.
NBC News projects that Trump has won key battleground states of North Carolina, Pennsylvania and Georgia, putting him within striking distance of 270 Electoral College votes. NBC News also projects that the Republicans will retake the Senate.
Investors are closely looking at the foreign exchange market, as it's one of the most liquid markets that are open as election results roll in. Currencies are more regularly traded during the overnight hours in the U.S. than domestic stocks and bonds.
"Watching the dollar is going to be critical tonight. That will be the most liquid and the most transparent messaging to what we are getting markets to do, because that's where people can put money to work fast," said David Zervos, Jefferies chief market strategist on CNBC's "Money Movers" on Tuesday.
Money Report
Traders generally expected that a strong night for Trump and Republicans in Congress could push the greenback higher. Trump's proposals to hike tariffs against major U.S. trading partners would, in theory, result in a stronger dollar.
"Levies on trade should increase domestic business activity and reduce U.S. imports. We believe these effects should help more domestic-oriented small-cap companies and raise the U.S. dollar's exchange value," Paul Christopher, head of global market strategy at the Wells Fargo Investment Institute, said in a note to clients Tuesday.
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The dollar has generally strengthened in the runup to Election Day. The Dollar Index rose more than 3% in October, though it has dipped in recent days.
