The United States currency dollar remained strong, crossing its last four-month high level against other major currencies on Tuesday’s session. Eventually, Bitcoin has also continued to rise to its new record high. This boost in the market comes after the investors’ increasing optimism and confidence in the newly formed Trump administration about the policies that will be beneficial for the financial movements. Also, investors are now confident that the assets and strategists will thrive under his leadership, and they are shifting their overall focus accordingly.
It is seen that the euro has declined to its lowest point and is now struggling to recover from its seven-month low; similarly, the Chinese yuan is also facing a three-month low. The decline in both major currencies is largely increasing concerns regarding the numerous tariffs and trade-based restrictions that the Trump administration might impose on both Europe and China; they are the primary centers of such measures. This news has created a negative scenario in the minds of euro and yuan investors, and now the majority of the investors are leaving the market.
The United States-based dollar index, which helps to track the performance of the dollar in terms of six major currencies, including the European euro, saw a minimal rise of 0.07%, reaching 105.49 as of 0037 GMT. This came after it reached the highest of 105.70 on Monday since July 3. Additionally, this shows the dollar’s strong support in the current global currency market.
Bitcoin showed an all-time high level of 89,637 dollars during Tuesday’s session, which is fueled by the enthusiasm over the commitment given by Donald Trump to make the United States of America a global crypto capital. Senior financial market analyst of Capital.com, Mr. Kyle Rodda, stated that if history has any indication, then there is a high chance that Bitcoin will go up by 10,000 dollars by the end of the year.
Kyle Rodda has indicated that the United States currency, the dollar, has witnessed a strong upturn and is being driven by the expectations that the American will perform well in the near future in comparison to other sets of economies and that the Trump administration will surely adopt assertive trade policies. Basically, this combination of economic confidence and expected difficult trade measures is fueling the demand for the dollar.
Investors are now measuring their anticipation, which they had made for the future interest rate cuts by the independent Federal Reserve. However, it is uncertain for now whether the Fed will make any further rate cuts during the December meeting, as previously anticipated. While this shows the strong market sentiment regarding the bearish move, it might go stronger than the expected economic conditions.
The projections made by the Decision Desk Headquarters are that the Republican Trump administration will hold the majority of both the Senate and the House of Representatives when the anticipations were made regarding his presidency during the month of January. The majority is beneficial for Trump to work on his policy goals, which include numerous tax rate cuts and also minimize the size of the federal government.
The chances of the Federal Reserve interest rate dropping in December have reduced to 65% compared to last week’s assumption of 80%, as directed by the CME Group’s FedWatch tool. This proves that the current U.S. economy is stable after the newly formed Trump administration, while declines in chances also indicate that there are rising concerns about whether Trump might be able to impose several tariffs and immigration policies in the states. It could fuel inflation, making the necessity of rate cuts in the market less important.
The warning has been given by Donald Trump to the Eurozone that it will face serious consequences after he is elected back to the presidency, mainly targeting the automotive industry for not importing enough state-based exports. He also made sure that he would impose a 60% tariff on China. As expected after the election results, the global currency market has been heavily impacted, with the yuan weakening to its worst level since August 2, reaching 7.2337 per dollar before recovering from the 7.2241 drop. Since April 22, the euro has also experienced a fall to 1.0629 dollars before recovering to 1.0658 dollars.
Additional pressure is created on the euro by the political instability in Germany, as the Greens joined for an early parliamentary election, increasing chances for a snap election. In spite of all this, the sterling stayed stable at 1.28646, and the yuan showed a drop of 0.1%.
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