The U.S. dollar fell to its lowest level in a week against its major peers on Wednesday, seeking to extend a three-day decline from a one-week peak as the market catches its breath after the rally frenzied in the wake of the election of Donald Trump.
A boost to the dollar and other traditional safe-haven currencies like the yen proved short-lived, after Russia's foreign minister said the country would do “everything possible” to avoid the outbreak of a nuclear war, hours after Moscow announced it would lower its threshold for triggering a nuclear strike.
Bitcoin hit a new all-time high above $94,000, driven by expectations of a friendlier regulatory environment for cryptocurrencies under Trump.
The dollar index – which measures the currency against six major peers including the yen and the euro – fell to a low of 106.07 for the first time since Wednesday last week, and rose is held at 106.18 at 0247 GMT.
The index climbed to a one-year high of 107.07 on Thursday, supported by expectations of big tax spending, higher tariffs and stricter immigration under the new U.S. administration, measures that , according to economists, could encourage inflation and potentially slow the easing of the Federal Reserve.
Investors are still waiting for Mr. Trump to name a Treasury secretary, after several other high-level appointments were announced, including Wall Street CEO Howard Lutnick to head the Commerce Department.
Some of Mr. Trump's nominees have sparked controversy because of their relatively limited experience in the field.
The “Trump trade” that has boosted the greenback faces challenges posed by Mr. Trump's controversial appointments and the escalating war between Russia and Ukraine,” DBS strategists wrote in a note to customer intent.
For the longer-term dollar, however, “more emphasis should be placed on the strength of economic data and the increasing likelihood that the Fed will need to further slow the rate cut trajectory in 2025,” they said.
Traders continue to lower expectations for an interest rate cut at the Fed's next meeting in December. The odds are now 57.3%, up from 58.7% a day earlier, according to the CME's FedWatch tool. A month ago, betting stood at 76.8%.
Fed Chairman Jerome Powell said last week that “the economy is not sending any signals that we should be in a hurry to cut rates,” following a series of strong economic indicators.
The dollar gained 0.9% to 154.84 yen after falling sharply to 153.28 on Tuesday following the Russia news.
The euro held steady at $1.0598, after falling to $1.0524 during the previous session.
Bitcoin remained stable at $91,954 after hitting a record high of $94,078.22.
The Financial Times reported that Mr. Trump's social media company was in talks to buy cryptocurrency exchange firm Bakkt, boosting hopes for a pro-cryptocurrency regime under Mr. .Trump.
