Dollar Dominance: U.S. Currency Surges to New Highs

The U.S. dollar hit a one-year high against major currencies, spurred by higher yields, Trump's election victory, and expectations of inflation-fueling policies. Rising Treasury yields and Republican control in Congress bolster the dollar, while the euro and other currencies weaken.

The U.S. dollar soared to a one-year high against major currencies on Thursday, marking its fifth consecutive daily gain. The surge was fueled by increased Treasury yields and Donald Trump's presidential election victory. The dollar rose above 156 yen, a level not seen since July, and stood at 155.85 yen.

The euro dropped to its lowest since November 2023, valued at $1.05554, down 0.13%. Sterling also fell, hitting a three-month low against the dollar at $1.2675. Analysts attribute the dollar's strength to anticipated inflation from higher trade tariffs and tighter immigration policies under Trump's administration, which could prolong the Federal Reserve's rate-cutting cycle.

As Trump's Republican Party is set to take control of both congressional chambers, expectations of deeper deficit spending and increased short-term economic growth are driving Treasury yields higher. The benchmark 10-year Treasury yield reached 4.483%, its highest since July, further strengthening the dollar.

(With inputs from agencies.)