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US DOLLAR AND BITCOIN ADVANCE SPURRED BY TRUMP TARIFF EXPECTATIONS BY REUTERS

by Tradinghow
November 12, 2024
in Forex News
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By Chibuike Oguh and Harry Robertson

NEW YORK/LONDON (Reuters) -The U.S. dollar rose to a 6-1/2-month high against
major peers on Tuesday, while bitcoin pared gains after earlier hitting a record
high amid expectations of inflationary import tariffs from Republican
President-elect Donald Trump

gained 1.88% to $89,683.00, slightly below a new all-time peak of $89,982. Trump
has vowed to make the U.S. “the crypto capital of the planet”.

Higher tariffs are expected to push up prices, leaving the Federal Reserve less
scope to cut interest rates. The yield on benchmark U.S. 10-year notes rose 13.1
basis points to 4.439%.

“It’s still an extension of the post-election moves; the economic calendar has
been relatively light although it’s picking up later in the week but for now the
market is focusing on the implications of a second Trump term, particularly
policies that would be positive for the dollar such as potential higher
tariffs,” said Vassili Serebriakov, an FX strategist at UBS in New York.

The , which measures the currency against six peers, rose 0.51% to 105.96 after
rising to as high as 106.17 – its highest level since early May.

With Trump’s Republican Party looking poised to take control of the House of
Representatives, according to Decision Desk HQ, it will hold a slim majority in
both houses of Congress, allowing the president-elect to push his agenda of
cutting taxes and regulation after he takes office in January.

“There’s been a broad move in the dollar that started before the election and it
probably got an added boost because it looks like we’re moving to a red sweep
scenario, which is broadly seen as positive for the dollar,” Serebriakov added.

Trump has warned that the euro bloc will “pay a big price” for not buying enough
American exports, with cars a particular target. He has threatened China with
blanket 60% tariffs.

Since his election last week, the euro has languished at a seven-month trough
and the yuan slumped to its lowest in more than three months, with Europe and
China both targets of potential Trump tariffs.

The euro is feeling additional pressure from political uncertainty. Germany, the
bloc’s biggest economy, is set to hold elections on Feb. 23, which will be 11
weeks after the collapse of Chancellor Olaf Scholz’s governing coalition.

The euro sank to $1.0596 on Tuesday, the lowest since November 2023, and was
last down 0.32% at $1.06215.

Sterling dropped 0.99% to $1.2742 after data showed regular UK wage growth
slowed and unemployment rose, with the pound also feeling the heat from the
dollar’s rally.

Against the Japanese yen, the dollar rose 0.6% to 154.63 yen. The Japanese
currency dropped to a three-month low of 154.715 per dollar last week.

The finished the domestic session at 7.2378 per dollar, its lowest close since
Aug. 1. The dollar – which tends to be swayed by the economic outlook for China,
Australia’s top trading partner – weakened 0.61% versus the greenback to
$0.6534.



“There’s definitely a herd mentality building up here and sometimes it’s nice to
find a contrarian approach to it,” said Amarjit Sahota, executive director at
Klarity FX in San Francisco.

“But other than getting some exhaustion in this (Trump) trade, which has really
been carrying now for a little while because it’s not just the election cycle,
the market has also been pairing back its dovishness on the Federal Reserve.”







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