The U.S. dollar reached a one-year high on Thursday, fueled by momentum from Donald Trump's trade policies and rising Treasury yields. This surge came despite growing expectations that the Federal Reserve may ease interest rates in December.
The strength of the U.S. dollar is primarily driven by investor optimism surrounding Trump’s policies. As the Republican Party is expected to control both houses of Congress starting in January, there is growing anticipation for aggressive fiscal measures, including increased deficit spending and higher trade tariffs. These policies are likely to push inflation higher, which could delay any rate cuts by the Federal Reserve.
Despite speculation that the Federal Reserve may reduce rates in December, the market is placing more weight on Trump’s fiscal measures. Higher Treasury yields and the prospect of inflationary pressures are supporting the dollar. In fact, the U.S. dollar index recently touched 106.56, its highest level since November of last year.
Meanwhile, Bitcoin saw a fresh surge to $93,480, continuing to gain momentum. As Trump has vowed to make the U.S. the "crypto capital of the world," this has sparked renewed interest in cryptocurrencies. On the other hand, the euro and British pound faced downward pressure as the U.S. dollar strengthened.
In other global markets, the Australian dollar struggled to recover after weaker-than-expected jobs data. This softer labor market provides the Reserve Bank of Australia with more room to focus on inflation, rather than immediate rate hikes.
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The U.S. dollar surged to a one-year high, driven by Trump’s trade policies and higher Treasury yields, despite Fed easing expectations.
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