TOKYO- The US dollar rose toward a four-month peak versus major peers on Tuesday, while bitcoin extended its record rally as investors continued to pile into trades seen as benefiting from the incoming Donald Trump administration.
The euro languished near an almost seven-month trough reached overnight, and the yuan slumped to a more than three-month low with Europe and China both major targets of potential Trump tariffs.
The US dollar index which measures the currency against six peers including the euro, rose 0.16 percent to 105.59, edging back towards Monday’s high of 105.70, its strongest since July 3.
Leading cryptocurrency bitcoin pushed to a new all-time peak of $89,637 earlier in the day. Trump has vowed to make the United States “the crypto capital of the planet”.
“If history is any guide, Bitcoin could easily finish the year around $100,000,” said Kyle Rodda, a senior financial markets analyst at Capital.com.
Meanwhile, “the expectation of US economic outperformance and aggressive trade practices from the Trump administration continues to push the US dollar higher,” Rodda said.
“Markets are dialing back expectations of Fed cuts going forward, with a cut at the December meeting being thrown into question.”
Trump’s Republican Party will control both houses of Congress when he takes office in January, Decision Desk HQ projected on Monday. That would enable him to push an agenda of slashing taxes and shrinking the federal government.
Potentially inflationary tariffs and immigration policies have seen market odds of a quarter point Federal Reserve interest rate cut on Dec. 18 pared to about 69 percent from nearly 80 percent a week ago, according to CME Group’s FedWatch Tool.
