Matthew Hooton has over 30 years’ experience in political and corporate communications and strategy for clients in Australasia, Asia, Europe and North America, including the National and Act parties and the Mayor of Auckland.
It was the Mexican peso that first indicated Donald Trump was winningtonight’s US election.
From 7pm to 9pm (New York time), the peso fell 1.4% to US$0.0489, its lowest all election season.
By 10pm, it was down further, to US$0.0485, a 2.3% fall over the three hours.
The peso is seen as the most straightforward “Trump trade”. If Trump wins, the Mexican economy will be in serious trouble because of his promised tariffs and global trade war and promise to force undocumented immigrants back across the southern border.
If Kamala Harris wins, Mexico can expect roughly the status quo.
There are few other factors influencing the peso-US dollar market.
After some gains in recent days, the peso’s sudden and very sharp decline indicated the currency markets had information Trump was in ascendency.
Likewise, prices in prediction markets began to move sharply. By 11pm (NYT), shares in “Trump to be President” had jumped to US$0.89c on PredictIt, suggesting the market now thinks he has an 89% probability of being elected, up from the roughly 50:50 pricing before polls closed.
The numbers coming out of Pennsylvania, which Harris must win to become president, have now begun to confirm the market data. With nearly 70% of the vote counted, Trump is ahead 51% to 48%.
Unless those numbers turn around tonight or in the days ahead, Trump will win.
Unlike him, Harris will have the integrity to concede, which should help to prevent violence in the immediate term.
Donald Trump (left) and wife Melania (right) cast their vote in Palm Beach, Florida earlier today as America heads to the polls.
But the world enters its most dangerous period since World War II, with Trump threatening to abandon Ukraine, withdraw the US’s security in Europe which will encourage Russia’s Vladimir Putin to expand his ambitions westward, launch a global trade war and collapse the World Trade Organisation (WTO).
Domestically, he promises to increase the US’s already unsustainable borrowing, including from China, to fund further corporate tax cuts. His promised tariffs will not bridge the difference.
US federal debt, already over 100% of GDP and growing by $2 trillion a year, will increase faster. No one knows how much the US can borrow before the market starts to doubts the integrity of its bonds, but we may soon find out.
Trump has also promised to jail his political opponents, and the US Supreme Court has ruled presidents cannot be prosecuted for actions in office.
He made similar threats in 2016 that he did not act upon, but back then his circle included at least some people who could be relied upon to keep his most extreme tendencies in check.
There are no such people around him this time. Nor is he constrained by the need to worry about re-election.
Barred from standing for re-election in 2028, the danger is he will seek to hold on to power by other means.
The US enters its most dangerous period since 1861, the start of the Civil War.
