By Amanda Cooper
LONDON (Reuters) – The dollar strengthened on Thursday as investors expected greater clarity on U.S. President-elect Donald Trump’s proposed policies amid an uncertain interest rate outlook, while bitcoin rose towards $100,000 for the first time.
has seen a surge over the past few weeks amid speculation that Trump will create an easier regulatory environment for cryptocurrencies.
It hit a record high of $97,902 on Thursday, confirming a report that Trump’s social media company was in talks to buy cryptocurrency trading company Bakkt. The stock recently increased by 2.75% and reached USD 97,070.
The rate was steady at 106.55, not far from last week’s high of 107.07.
“In fact, the United States is still the main driver. I feel like this morning is a bit risk-free. “So far, the main winner is the yen and I think that will happen this week, with Ukraine now front and center,” said chief strategist Chris Beauchamp, referring to the escalating conflict between Ukraine and Russia.
The euro, one of the main victims of the dollar’s post-election rally, fell another 0.1% to $1.053275.
European leaders and policymakers are already grappling with the potential consequences of Trump’s proposed tariff increases, and political uncertainty in the region’s largest economies – Germany and France – is deepening the mix.
French far-right leader Marine Le Pen threatened on Wednesday to seek to overthrow Prime Minister Michel Barnier’s brittle coalition government if her National Rally (RN) party’s cost of living concerns are not addressed in the 2025 budget.
“There is enough cause for concern for people to just start being more cautious at this point,” Beauchamp said.
The seemingly unstoppable dollar is helped by wild swings in U.S. interest rate expectations. According to CME’s FedWatch Tool, the market now sees just a 54% chance the Federal Reserve will cut interest rates next month, down from 82.5% just a week ago.
A Reuters poll showed most economists expect the Fed to cut interest rates at its December meeting, with shallower cuts in 2025 than expected a month ago due to the risk of higher inflation from Trump’s policies.
BOOM TRUMP
The dollar has strengthened more than 2% since the November 5 U.S. presidential election on expectations that Trump’s proposals to raise trade tariffs and tax cuts could reignite inflation and limit the Fed’s ability to lower interest rates.
At the same time, traders are assessing what Trump’s campaign promises on tariffs mean for the rest of the world, with both Europe and China likely to be in the firing line.
“Right now we are stuck in a wait and worry zone as Trump is in the process of assembling his cabinet,” said Moh Siong Sim, currency strategist at Bank of Singapore.
“There are a lot of things that are missing in terms of understanding,” including the timing and scope of the policies, and those details won’t be known for several months, he said.
Elsewhere, Ukraine fired a salvo of British Storm Shadow cruise missiles at Russia on Wednesday – the latest recent Western weapon it has been allowed to exploit against Russian targets – a day after firing US ATACMS missiles.
The Japanese yen outperformed amid rising geopolitical tensions. The dollar last lost 0.6% on the day, trading at 154.52 yen.
The yen has lost about 10% of its value over the past few months as investors bet heavily in favor of the dollar given the risk that U.S. interest rates will remain well above Japan’s for some time.
Bank of Japan Governor Kazuo Ueda said on Thursday that the central bank will take exchange rate movements “seriously” into account when making economic and price forecasts.
He noted that there is still a month left until the BOJ’s next policy meeting in December, adding that there will be more information to digest by then.
