He global dollar rose on Wednesday, renewing its post-election advance after a three-session decline, as investors seek more information on the U.S. interest rate plans. Federal Reserve (Fed) and the policies proposed by the president-elect of United States, Donald Trump.
He dollar index —which measures the performance of the greenback relative to a basket of six other internationally relevant currencies—gained 0.52% to 106.65, recovering from a three-day decline, while the euro fell 0.5% to $1.0542.
It had hit a one-year high of 107.07 on Thursday last week, driven by expectations of big fiscal spending, higher tariffs and more restrictive immigration under the incoming US administration; measures that, according to economists, could encourage inflation and potentially slow down the flexibility of the Federal Reserve (Fed).
Meanwhile, the momentum from the day before dollar and other traditional safe haven currencies such as yen proved short-lived, after the Foreign Minister of Russia said that the country would “do everything possible” to avoid the start of a nuclear war, hours after Moscow announced that it would lower its threshold for a nuclear attack.
It is that, compared to the yen, the dollar strengthened 0.43% to 155.31, hitting a three-month low that raised expectations that the Bank of Japan will likely adopt a more hawkish stance as the currency approaches the levels that prompted intervention in July.
Foley said it was the $155 level against the yen that was making markets nervous about the possibility of intervention, adding that “if there is a possibility that verbal intervention is having a significant impact on stabilizing the currency pair, then that is likely to deter Ministry of Financeat least for a time, to resort to real intervention.
BOJ Governor Kazuo Ueda He made only a passing mention of the currency on Monday.
Eyes are on Trump
At the same time, investors continue to hope that trump appoint a Treasury secretary, one of the highest-profile Cabinet posts overseeing the country’s economic and financial policy, after some of his choices sparked controversy over his relatively little relevant experience.
“He ‘Trump Trade’ that prompted dollar faces challenges from Trump’s controversial Cabinet nominations and the escalation of the war between Russia and Ukraine,” wrote strategists at D.B.S. in a note to clients. However, for him dollar In the long term, “more weight should be given to firm economic data and the increasing likelihood that the Fed will have to further slow the rate cut path in 2025,” they said.
“Having discounted a large part of the negotiation of Trump, we could be in a consolidation phase until early January, when he takes the reins and we have a firmer idea of the details of the policy,” Foley said.
Operators continue to reduce expectations of an interest rate cut at the next Fed meeting in December. The odds now stand at 59.1%, down from 82.5% a week ago, according to the tool FedWatch of CME.
He bitcoin, For its part, it slowly rose towards the all-time peak above $94,000 reached overnight, driven by expectations of a friendlier regulatory environment for cryptocurrencies under Trump.
Source: Ambito
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