FX round-up: Sterling, dollar up as market digests hair-raising Trump win

Sterling was bouncing convincingly higher on Wednesday afternoon in what was an overall volatile session for currencies after Donald Trump's hair-raising-to-many win in the US presidential race.

Republican candidate Trump's win trounced a good number of mainstream pollsters that predicted Democratic wannabe Hillary Clinton would win the campaign footrace to the Oval Office.

They got it wrong, but distinctively-barneted Trump offered some assurance to the initially shocked market in what what was widely received as a measured victory speech.

At about 17:00 GMT, sterling was up 0.75% to $1.2472, the dollar by that time being well off earlier knee-jerk lows. Sterling rose 1.36% to €1.1390 and was up 0.46% to 130.769 yen.

The dollar-spot index was up 0.48% to $98.329.

The British unit -- humiliated lower by UK's Brexit vote in June -- was up almost 2% on the Australian, Canadian and New Zealand dollars. It rose 3.08% to 16.8252 South African rand.

"The narrative seems to be that Trump's presidential promises during his victory speech have reassured investors," said Connor Campbell of Spreadex.

This allowed for a "remarkable recovery" in forex markets this afternoon.

"The market may also be correcting the intensely negative gut reaction it had to the (election) result, much as it did in the aftermath of the Brexit," he added.

But, Campbell and other market watchers sounded a cautious note when they said it too early to know exactly what Trump had in store as the newly elected president.

At about 17:00 GMT, the dollar was up 0.71% to €0.9134, but down 0.24% to 104.91 yen. It gained roughly 1% on the aussie, loonie and kiwi, and rose 2.36% to 13.4973 rand.

Focus was already turning to the future of US Federal Reserve chair Janet Yellen under a Trump administration, and also the hitherto expected US rate hike in December.

"Trump has described himself as a 'low rates guy' but has also been very critical of Janet Yellen, saying she should be 'ashamed of herself'," said Jasper Lawler of CMC Markets.

"However, none of this appears to be a consideration in today's price action. Fed funds futures are pricing in an 80% chance of rate hike in December, down only modestly from 84 on Tuesday."

Others held different views. Hargreaves Lansdown said earlier on Wednesday that the chances of a US rate hike had now been pared to 50-50, from 80-20 previously.

Lawler went on to state the initial greenback sell-off over potential rate-rise delay had morphed into a "huge rally as markets priced in higher inflation with fiscal stimulus."

The flight into safe-havens boosted the price of metals and inparticular gold.

Monex Europe summed it up: "The future is far from certain, and all eyes will be on the President-elect as he begins to signal the direction of policy."

On the data front, the UK trade deficit widened to £5.2bn in September from £3.8bn in August, Office for National Statistics said. A deficit of £3.9bn was expected by the market.