U.S. Dollar Takes a Breather as Investors Await Clarity on Trump’s Policies
The U.S. dollar paused its climb on Thursday as traders awaited more clarity on U.S. President-elect Donald Trump’s proposed policies and sought to second-guess the prospects of less aggressive interest rate cuts from the Federal Reserve.
Bitcoin Speeds Toward $100,000 Amid Regulatory Hopes
Meanwhile, bitcoin sped toward $100,000, continuing a blistering rally in the past few weeks on hopes the president-elect will create a friendlier regulatory environment for cryptocurrencies. The cryptocurrency reached a record high of $97,902 on Thursday, underpinned by a report that Trump’s social media company was in talks to buy crypto trading firm Bakkt. It was last up 2.54% at $96,860.
Market Analysis and Investor Sentiment
- The dollar was down 0.11% at 106.49 but was holding onto most of the previous session’s gains.
- Investors are increasingly weighing the possibility that the Fed might not cut rates next month.
- A Reuters poll showed most economists expect the Fed to cut rates at its December meeting.
Impact of Trump’s Policies on the Dollar
The dollar has rallied more than 2% since the Nov. 5 U.S. presidential election on bets that Trump’s policies could reignite inflation and temper the Fed’s future rate cuts. At the same time, traders are assessing what Trump’s campaign pledges of tariffs mean for the rest of the world, with Europe and China likely in the firing line.
Euro and Sterling Movement
The euro was up 0.09% at $1.0554 after slipping 0.5% on Wednesday, while sterling traded at $1.2652, up 0.04%.
Bank of Japan’s Stance on Foreign Exchange-Rate Moves
Bank of Japan Governor Kazuo Ueda said on Thursday that the central bank will “seriously” take into account foreign exchange-rate moves in compiling its economic and price forecasts. The dollar gave up some gains against the yen, down 0.51% at 154.63 yen after Ueda’s remarks.
Thorough Analysis
The financial markets are in a state of anticipation and uncertainty as investors await more clarity on the impact of Trump’s policies on the U.S. dollar and global trade. The recent rally in bitcoin reflects hopes for a friendlier regulatory environment for cryptocurrencies under the new administration. Market sentiment is divided on the possibility of a Fed rate cut in December, with economists expecting shallower cuts due to the risk of higher inflation from Trump’s policies.
The euro and sterling are experiencing fluctuations against the dollar, while the Bank of Japan is closely monitoring foreign exchange-rate moves. The recent escalation of the Russia-Ukraine conflict and the prospect of trade tariffs are also influencing market dynamics. Overall, investors are treading cautiously as they analyze the implications of Trump’s presidency on the global economy and financial markets.