U.S. Dollar Hits 6-Month High Amid Trump Trade Expectations and Inflation Data Focus

U.S. Dollar Surges to One-Year High Amid Rising Yields and Trump’s Economic Policy Expectations

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The U.S. dollar maintained its strong upward momentum on Thursday, reaching a one-year high against a basket of major currencies, driven by rising Treasury yields and optimism following Donald Trump’s presidential election victory. The dollar index, which tracks the greenback’s performance against six significant peers, rose by 0.3% to 106.79, briefly touching 107, its highest point since early November 2023.

Dollar Strength Fueled by Rising Yields and Trump’s Policy Outlook

The benchmark 10-year Treasury yield climbed to 4.483%, its highest level since July, buoyed by expectations of inflationary pressures stemming from Trump’s proposed policies. These include higher trade tariffs, stricter immigration measures, and anticipated increases in government spending aimed at boosting short-term economic growth. Such expectations have led to speculation that the Federal Reserve could extend its current rate-cutting cycle.

The dollar also surged past 156 yen for the first time since July, reflecting its broad-based strength. The euro dropped to $1.0531, its weakest since November 2023, while the British pound hit a four-month low at $1.2630.

Trump’s Victory Provides Market Momentum

With Trump set to take office in January and the Republican Party projected to control both chambers of Congress, markets are anticipating smoother passage of his economic policies. This outlook is reinforcing investor sentiment and contributing to the dollar’s upward trend.

The dollar experienced a brief dip on Wednesday after U.S. consumer inflation data came in as expected, solidifying the likelihood of a Federal Reserve rate cut in December. However, traders quickly viewed the dip as a buying opportunity, further boosting the greenback.

Bitcoin and Cryptocurrency Market Rally

Bitcoin soared to a record high of $93,480 overnight before experiencing a minor pullback, with prices again approaching that peak on Thursday. The cryptocurrency’s rally comes amid Trump’s promises to transform the U.S. into “the crypto capital of the planet,” an ambition that has invigorated market participants.

Currency Movements Across the Globe

• Australian Dollar: The Aussie dollar fell to a three-month low at $0.6464 following slightly weaker-than-expected jobs data. However, the report was not seen as weak enough to alter the Reserve Bank of Australia’s steady monetary policy stance.
• Swiss Franc: The dollar appreciated by 0.4% against the Swiss franc, trading at 0.8897 francs. Meanwhile, the Swiss currency strengthened against the euro, with the common currency hovering near a three-week low at 0.9371 francs.

Overall, the strong U.S. dollar continues to dominate currency markets, influenced by a combination of rising yields and expectations of economic shifts under the incoming Trump administration.