NEW YORK, November 12, 2024: The U.S. dollar surged to its highest level in four months against major currencies on Tuesday, while bitcoin continued its record-breaking rally amid growing expectations of policies from the incoming Donald Trump administration that could significantly impact global trade and the U.S. economy.
The U.S. Dollar Index (DXY), which tracks the dollar’s value against six major currencies, rose 0.16% to 105.59 early on Tuesday, coming close to Monday’s high of 105.70, its strongest level since early July.
The dollar’s strength reflects investor optimism about U.S. economic growth under Trump’s leadership, particularly as the administration prepares to push for aggressive trade policies and tax cuts.
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At the same time, bitcoin extended its extraordinary rally, hitting an all-time high of $89,637. Experts, including Kyle Rodda, a senior financial markets analyst at Capital.com, predicted that bitcoin could approach $100,000 by the end of the year.
Trump has made it clear he aims to make the U.S. “the crypto capital of the planet,” fueling investor enthusiasm for digital currencies.
Trump’s incoming presidency, along with a Republican-controlled Congress, is expected to drive a wave of fiscal policies, including tax cuts and government spending reductions.
However, these policies also come with the risk of inflation, particularly if Trump follows through with his threats to impose steep tariffs on China and Europe.
The president-elect has warned that the eurozone will “pay a big price” for not purchasing enough American exports, particularly targeting the European automotive industry, while China could face blanket tariffs of up to 60%.
As a result, the Chinese yuan slipped to a more than three-month low against the dollar, touching 7.2505 per dollar before recovering slightly to 7.2469.
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Similarly, the Australian dollar, which is sensitive to economic conditions in China, dropped 0.33% to $0.65525.
The euro, meanwhile, struggled near a seven-month low, falling to $1.0629 overnight — its weakest level since April 22.
Concerns about political instability in Germany, where Chancellor Olaf Scholz’s coalition faces increasing opposition calls for early elections, have added to the pressure on the shared currency.
In the U.K., the British pound weakened by 0.23% to $1.2841 as investors awaited employment data that could signal the pace of interest rate cuts from the Bank of England.
The Japanese yen also remained under pressure, briefly slipping to a three-month low of 154.715 per dollar last week before recovering slightly to 153.48.
The yen’s decline is largely due to market expectations of a U.S. economic rebound that could narrow the interest rate differential between the U.S. and Japan.
Overall, the markets are adjusting to a new economic and political landscape under the incoming Trump administration, with trade policies, tax reforms, and fiscal stimulus set to drive the outlook for global currencies and markets in the coming months.