By Chibuike Oguh
NEW YORK (Reuters) – The U.S. dollar rose to a one-year high against major currencies on Wednesday, driven by so-called Trump trades and after U.S. inflation for October came in as expected, indicating the Federal Reserve interest rates will continue to decrease.
The dollar hit its highest level since November 2023, buoyed by Donald Trump’s victory in last week’s US presidential election, raising expectations of potentially inflationary tariffs and other measures from his new administration.
Trump’s Republican Party will also control both houses of Congress when he takes office in January, Edison Research predicted Wednesday, allowing him to push through an agenda of tax cuts and shrinking the federal government.
The , which measures the dollar against a basket of currencies including the yen and euro, rose 0.43% to 106.44 after hitting a high of 106.53.
“I’m not sure the inflation numbers affected things too much as they were pretty much in line with expectations,” said Brad Bechtel, Global Head of FX at Jefferies.
“I think it’s just a continuation of Trump’s trading mentality… which leads to a strengthening of the dollar on a broad basis, but also to a kind of exodus of some of the emerging economies. [emerging market] long positions.”
Labor Department data showed Wednesday that the U.S. consumer price index rose 0.2% for the fourth straight month, in line with economists’ expectations, amid higher shelter costs such as rents. In the twelve months to October, the CPI rose by 2.6%.
US government bond yields fell due to inflation figures, with yields, which are usually in line with interest rate expectations, falling 6.5 basis points to 4.279%.
“So there was definitely a lot of concern about this number as it is just one of the new bricks in this kind of wall of worry; so there is a little bit of relief and returns are lower,” said Marvin Loh, senior global manager. market strategist State Street (NYSE:) in Boston.
“It just shows how tense the market is based on the Fed, on inflation, and certainly on this vague Trump trade. The dollar seems to be one of the cleanest and easiest ways to play the Trump trade, as well as bitcoin. It seems like it.”
rose above the $90,000 level for the first time, driven by euphoria over Trump’s election victory and expectations that his administration will be favorable to cryptocurrencies. Bitcoin rose 2.75% to $90,734.00. fell 3.11% to $3,178.60.
Japanese wholesale inflation accelerated in October at the fastest annual pace in more than a year, complicating the Bank of Japan’s decision on how quickly to raise interest rates.
The yen broke through 155 per dollar, the Japanese currency’s weakest level since late July. The last was 155.46 yen per dollar.
The euro continued its decline amid expectations of possible Trump tariffs. Political uncertainty in Germany, the bloc’s largest economy, has also weighed on the currency following the collapse of Chancellor Olaf Scholz’s governing coalition last week and planned snap elections on February 23.
The euro fell 0.51% to $1.0569. The price had fallen to $1.055575, the lowest level since November 2023.
The dollar remained steady at 7.243 against offshore. Against the Swiss franc
