The U.S. dollar traded near a four-month high against its major peers on Tuesday, while bitcoin extended its record rally as investors continued to snap up trades seen as benefiting the incoming administration by Donald Trump.
The euro remained near a near seven-month low hit overnight, while the yuan found itself near a more than three-month low, with Europe and China both in decline. particular targets of potential Trump tariffs.
The U.S. dollar index, which measures the currency against six other currencies including the euro, rose 0.07 percent to 105.49 at 0037 GMT, after hitting 105.70 on Monday for the first time since July 3.
Leading cryptocurrency Bitcoin hit a new all-time high of $89,637 on Tuesday. Mr. Trump has pledged to make the United States “the crypto capital of the planet.”
“If history is anything to go by, bitcoin could easily end the year around $100,000,” said Kyle Rodda, senior financial markets analyst at Capital.com.
In the meantime, “expectations of an outperformance of the US economy and aggressive trade practices from the Trump administration continue to push the US dollar higher,” said Kyle Rodda.
“Markets are reducing expectations for Fed cuts in the future, with a reduction at the December meeting in question.
Mr. Trump's Republican Party will control both houses of Congress when he takes office in January, Decision Desk HQ forecast Monday. This would allow him to implement a program of cutting taxes and reducing the size of the federal government.
Potentially inflationary tariffs and immigration policies have lowered the odds of a quarter-point interest rate cut by the Federal Reserve on Dec. 18 to about 65 percent, down from nearly 80 percent a year ago. is a week old, according to CME Group's FedWatch tool.
Mr Trump warned the euro bloc it would “pay a high price” if it did not buy enough US exports, with cars particularly targeted by the new US president. He threatened China with 60% tariffs.
The offshore yuan plunged as low as 7.2337 per dollar on Monday, its lowest level since August 2, before last trading at 7.2241.
The euro fell to $1.0629 overnight, for the first time since April 22, and last traded at $1.0658.
The common currency is under additional pressure from political uncertainty in the bloc's largest economy, Germany. Chancellor Olaf Sholz's latest coalition partner, the Greens, joined opposition calls on Monday for an early parliamentary vote to pave the way for a quick election.
Sterling was little changed at $1.28645.
The yen edged closer to a three-month low of 154.715 per dollar, losing around 0.1 percent to 153.865, after falling 0.7 percent overnight.
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