Dollar, Bitcoin Rally Amid Trump Trade Policies; Euro and Yuan on the Decline

Image Credit: Reuters

The U.S. dollar traded near a four-month high against major currencies on Tuesday, while Bitcoin continued its record-breaking rally, fueled by optimism around the incoming Trump administration. 

The euro remained close to a nearly seven-month low reached the previous night, while China’s yuan approached a three-month low, as both regions are potential targets for Trump’s proposed tariffs. The U.S. dollar index, which tracks the dollar against six major currencies including the euro, edged up by 0.07% to 105.49 by 0037 GMT, after hitting a high of 105.70 on Monday, a level last seen on July 3.

Bitcoin reached a new peak of $89,637 on Tuesday, as Trump has promised to position the U.S. as the global hub for cryptocurrency. 

“If past trends hold, Bitcoin could easily reach $100,000 by year-end,” said Kyle Rodda, a senior analyst at Capital.com. He added that the expectation of U.S. economic strength and aggressive trade policies under Trump is bolstering the dollar’s value.

Market expectations for Federal Reserve rate cuts have eased, with the likelihood of a December rate reduction dropping to around 65% from nearly 80% a week ago, according to CME’s FedWatch Tool, amid Trump's plans for tax cuts and potentially inflationary trade measures.

Trump has warned the eurozone of consequences for inadequate U.S. imports, with European carmakers in particular facing potential tariffs, while China could see sweeping 60% tariffs.

The offshore yuan hit a low of 7.2337 per dollar on Monday, the weakest since August 2, before recovering slightly to 7.2241. 

The euro fell to $1.0629 overnight, its lowest since April 22, and last traded at $1.0658, pressured by political uncertainty in Germany, where Chancellor Olaf Scholz’s coalition partner, the Greens, joined calls for an early election.

The British pound held steady at $1.2864, while the yen dipped 0.1% to 153.865 per dollar after a 0.7% decline overnight, nearing last week’s three-month low of 154.715 per dollar.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters"all rights reserved by the original author.