Trump's Economic Agenda Boosts U.S. Dollar Surge

The U.S. dollar reached a 6-1/2-month high amid inflationary tariff expectations from President-elect Donald Trump. This rise impacts global currencies, with the euro and yuan experiencing significant pressure. Market reactions anticipate potential economic policies favoring the dollar, including higher tariffs and tax cuts, as Trump takes office.

The U.S. dollar surged to a 6-1/2-month high against major currencies on Tuesday, driven by expectations of inflationary tariffs from President-elect Donald Trump. Meanwhile, bitcoin reached a new peak before retreating slightly as the market reacted to the incoming administration's economic policies.

Trump's proposed tariffs are anticipated to elevate prices, leaving the Federal Reserve with limited room to cut interest rates. This development has pushed the yield on U.S. 10-year notes up by 13.1 basis points to 4.439%. The market's focus remains on the dollar, boosted by the prospect of a Republican-controlled Congress supporting Trump's pro-dollar policies.

Amidst this dollar rally, the euro and yuan have hit new lows, with potential tariffs adding pressure. The euro faces additional uncertainty due to upcoming German elections, while the yuan suffers amidst trade tensions. As the market considers the implications of a second Trump term, analysts note a shift away from previously dovish economic positions.

(With inputs from agencies.)