Dollar Reaches 13-Month High Amid Economic Expectations
The U.S. dollar has surged to a 13-month high, climbing approximately 3% since the start of November. This increase is largely attributed to investor anticipation regarding the Federal Reserve's interest rate decisions and the economic policies of President-elect Donald Trump. The dollar index rose by 0.08% to 107.15, reaching its peak at 107.18, with no immediate data expected to reverse this upward trend.
Market analysts, including Tony Sycamore from IG, suggest that the focus is now on potential catalysts for the dollar's movement, particularly whether the Fed will implement a rate cut in December. Current expectations indicate a 57.8% probability of a 25 basis point cut, down from 72.2% a week prior.
Major Currencies Decline Against the Dollar
The dollar's strength has led to declines in several major currencies. The British pound fell 0.14% to $1.25705, while the euro dropped to a 13-month low of $1.0461 before slightly recovering to $1.0469. The euro's decline has been exacerbated by ongoing geopolitical tensions between Russia and Ukraine, as well as political instability in Germany.
Additionally, the Japanese yen has depreciated over 7% against the dollar since October, recently trading at 154.84 yen. The New Zealand dollar also hit a one-year low of $0.58265, as speculation grows regarding a potential 75 basis point interest rate cut by the Reserve Bank of New Zealand.
Bitcoin Approaches $100,000 Amid Trump’s Support
In the cryptocurrency realm, Bitcoin has experienced significant gains, briefly reaching a record high of $99,388 before settling at $99,028. This surge represents an increase of over 40% since the U.S. election on November 5, driven by expectations that Trump will relax regulations on cryptocurrencies. The term “Trump trades” has emerged, referring to investments in assets likely to benefit from Trump's policies.
Reports indicate that Trump's team is exploring the establishment of a dedicated White House position for cryptocurrency policy, further fueling interest in the digital asset market. Following the election, more than $4 billion has flowed into U.S. Bitcoin exchange-traded funds, and related stocks have also seen substantial increases, with companies like Mara Holdings and MicroStrategy experiencing notable stock price jumps. The total market capitalization of Bitcoin has surpassed $1.92 trillion, contributing to a broader cryptocurrency market value exceeding $3.18 trillion.
