London (awp/afp) – The dollar continues its run on Tuesday, driven by the prospects of Donald Trump’s inflationary policies, while other safe havens such as gold and the yen benefit from market fears on the geopolitical level.
Around 11:10 a.m., the American currency climbed 0.44% against the euro, to $1.0552, and advanced 0.34% against the pound, to $1.2634.
After a small decline the day before, the greenback regains momentum on Tuesday, while the probability of a rate cut by the Federal Reserve (Fed) at its next meeting on December 17 and 18 diminishes, underlines Patrick Munnelly, of Tickmill.
“The markets consider the budgetary spending planned” by President-elect Donald Trump, namely “higher customs duties and tougher immigration, as inflationary,” notes the analyst.
These policies “could thus hinder the Fed’s rate cuts at a time when a series of solid economic data is already restricting the room for maneuver” of the American central bank.
In the euro zone, inflation was posted on Tuesday at 2% year-on-year in October, in line with expectations, which did not hinder the fall of the euro.
In geopolitical news, Russian President Vladimir Putin signed on Tuesday, on the thousandth day of his offensive against Ukraine, the decree expanding the possibilities of using nuclear weapons.
This signing comes just after the United States authorized kyiv to strike Russian soil with its long-range missiles.
Just like the yen, gold is “riding the wave of geopolitical anxiety”, especially as “the specter of a trade war” looms which could be provoked by the introduction of new customs duties towards the United States. United, underlines Stephen Innes, analyst at SPI AM.
On Tuesday, gold gained 0.86% to $2,634.40 per ounce.
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