The U.S. dollar index gained 0.2% to 106.69, its highest since early November 2023
The U.S. dollar stood at a one-year high against major peers on Thursday and headed for a fifth consecutive daily gain fuelled by higher yields and Donald Trump’s election victory.
The dollar jumped above 156 yen for the first time since July. The euro plunged to its lowest since November 2023 at $1.0546 and sterling reached its lowest on the dollar in three months at $1.2683.
Higher trade tariffs and tighter immigration under the incoming Trump administration are projected to fuel inflation, potentially slowing the Fed’s rate cutting cycle longer term. Expectations for deeper deficit spending are lifting Treasury yields, providing the dollar with additional support.
The President-elect’s Republican Party will control both houses of Congress when he takes office in January, Edison Research projected on Wednesday, giving him sweeping power to push his agenda.
The dollar is backed by carry, momentum, growth differentials, (and) impending fiscal and tariff kickers, said Chris Weston, head of research at Pepperstone.
While trends don’t last forever, until U.S. economics start to break down, it is likely that an increasingly rich USD position proves to be the primary factor that could cause a tradeable selloff, he said.
Crypto currency bitcoin also rose to a new record high of $93,480 overnight, and was rising back towards that level in Asia. Trump has vowed to make the US “the crypto capital of the planet”.
The U.S. dollar index, which measures the currency against six top counterparts including the euro and yen, gained 0.2% to 106.69, its highest since early November 2023.
The dollar had slipped briefly on Wednesday after a measure of U.S. consumer inflation met economists’ forecasts, keeping the Fed on track to lower rates at their meeting in December.
