That is a horn wire and should pass thru the center of the steering box, at the bottom. That wire travels up to the horn relay, located just above the battery. On the 54-5 cars it plugs onto a socket in the relay, as opposed to using an eye/screw combination like the other connections on the relay.
If the 54 you have is the red/white car, you have a very nice automobile! Elwood was very proud of that car and aside from one mishap where someone ran into it at a Kaiser meet years ago, it has needed very little attention. He took very good care of the car and I sure hope you do too!
Welcome to the exclusive club of 54 Kaiser owners. They made precious few of them...and even fewer survive.