New York/London – The U.S. dollar climbed to its highest point in over six months against major currencies on Tuesday, while Bitcoin eased slightly after hitting a record level amid rising expectations of inflationary tariffs from President elect Donald Trump.
Bitcoin increased by 1.88% to $89,683.00, just under a new peak of $89,982, with Trump expressing ambitions to make the U.S. the global leader in cryptocurrency.
Analysts suggest that potential new tariffs could drive up prices, making it harder for the Federal Reserve to justify interest rate cuts. U.S. 10-year Treasury yields rose by 13.1 basis points to 4.439%.
Vassili Serebriakov, FX strategist at UBS, noted, “The market continues to respond to post election policies, especially potential tariff increases that could strengthen the dollar.”
The dollar index, which tracks the U.S. dollar against six other currencies, increased by 0.51% to 105.96, reaching as high as 106.17, its strongest level since early May.
With Republicans likely to secure a narrow majority in Congress, Trump is expected to push for tax cuts and deregulation as he assumes office in January.
“The dollar has shown strength even before the election, and expectations of a full Republican win are fueling that momentum,” added Serebriakov.
Trump has criticized the eurozone, particularly for its low levels of American imports, and warned of significant tariffs on China, with some as high as 60%. Since Trump’s election, the euro has dropped to a seven-month low, and China’s yuan is at its lowest in over three months.
Political factors are also weighing on the euro as Germany, the eurozone’s largest economy, prepares for elections in February after the collapse of Chancellor Olaf Scholz’s coalition government. The euro declined to $1.0596 on Tuesday, its lowest since November 2023, while the pound fell 0.99% to $1.2742 amid a strong dollar and mixed economic data from the UK.
The dollar also gained against the Japanese yen, rising 0.6% to 154.63 yen, while the yuan in China closed at 7.2378 per dollar, marking a low since August.
Amarjit Sahota, executive director at Klarity FX, noted, “Despite some exhaustion in this trade, the market continues to react to both the election outcome and a less dovish stance from the Federal Reserve.”
