THE US dollar continued its relentless march higher on Thursday (Nov 14), trading at a one-year high against major peers and headed for a fifth straight daily gain fuelled by higher yields and Donald Trump’s election victory in the United States.
The greenback climbed above 156 yen for the first time since July, while the euro slumped to its weakest since Nov 2023 and was last US$1.05310 down 0.32 per cent. Sterling hit its lowest on the dollar in four months at US$1.2630.
“It’s all about the dollar and Donald Trump, that’s the story for FX markets,” said Nick Rees currency strategist at Monex Europe.
Higher trade tariffs and tighter immigration under the incoming Trump administration are projected to fuel inflation, potentially slowing the Federal Reserve’s rate cutting cycle longer term.
These, alongside expectations for deeper deficit spending and higher short term economic growth are lifting Treasury yields, providing the dollar with additional support.
The benchmark 10-year Treasury yield hit 4.483 per cent on Thursday, its highest since July.
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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 wide powers to push his agenda.
The dollar index, which measures the currency against six top counterparts including the euro and yen, added 0.3 per cent to 106.79, and briefly touched 107, its highest since early November 2023.
The dollar had dipped briefly on Wednesday after a measure of US consumer inflation met economists’ forecasts, keeping the Fed on track to reduce rates at their meeting in December, though traders saw this as a buying opportunity.
“We think this week’s price action has given us a taste of what’s to come in FX markets in this second Trump term, with brief dollar corrections – like after yesterday’s US CPI print – taken as an opportunity to enter structural USD longs at more attractive levels,” said ING analysts in a morning note.
Cryptocurrency Bitcoin also shot to a record high of US$93,480 overnight, and, after a brief pullback, was rising back towards that level on Thursday. Trump has vowed to make the US “the crypto capital of the planet”.
Elsewhere, the Australian dollar fell to a three-month low after marginally weaker jobs data, touching US$0.6464, but investors assumed the report was far from weak enough to change the Reserve Bank of Australia’s steady policy outlook.
The Swiss franc remained under pressure against the dollar, which was up 0.4 per cent at 0.8897 francs, but the alpine safe haven has been firming on the euro. The common currency was last at 0.9371 francs, just off Wednesday’s three-week low. REUTERS
