Dollar Slips to Lowest Level in a Week
The United States dollar has weakened to its one-week low against some of the major currencies during Wednesday`s session, making it a three-day decline from its most recent rise. The decline comes as the market got steady after the tremendous rise during the victory result of Donald Trump in the U.S. presidential election.
However, the initial phase of the rally has been driven by the anticipation of the increase in fiscal spending, taxation rate cuts, and deregulation under the newly elected Trump administration, which might fuel optimism about America’s economic growth. The market is now stable and reconsiders the sustainability of these rises. Investors are now waiting for strong policy details.
Cryptocurrencies Strengthened by Anticipated Trump Administration Policies
The dollar and other major currencies, like the yen, have significantly increased overnight but ultimately lost their momentum. The change came after the Russian foreign minister assured Russia of the efforts to prevent nuclear war, despite Moscow’s previous disclaimer regarding lowering its threshold for a nuclear strike.
Crypto such as Bitcoin has touched its highest valuation of 94000 dollars, sustained by the market`s confidence about a most favourable regulatory environment for cryptocurrencies under the newly elected Trump administration. The anticipation made regarding the reduction of oversight and policies for digital assets has driven the crypto currency`s position, despite the geopolitical tensions, and moved towards a safer investment option.
The dollar index, which tracks the US currency against six major currencies, which also include the yen and euro, dropped by around 106.07, which is the lowest level since 13th November`s stats, but slightly recovered to 106.18 by
02:47 GMT. This indicates a reversal move in the market after comparison against last Thursday`s one-year high of 107.07.
Market Reanalyzes Uncertainties Amid Inflation Concerns
During the initial phase, the rally was driven by the expectations of significant fiscal spending, a higher rate of tariffs, and strict immigration policies under the newly formed U.S. presidential administration. These could impact the Federal
Reserve`s easing efforts and might also lead to a rise in inflation, while the recent pullback indicates a reassessment of the anticipations by the market is necessary at this point.
Now, the investors were closely monitoring Donald Trump`s announcement regarding his Treasury Secretary, followed by other major appointments like Wall Street CEO Howard Lutnick as head of the commerce department. Meanwhile, some of Trump`s picks for his administration have lightened the criticism, as they have less administrative experience.
Questions arise about their capability to implement these policies effectively. As per the strategist of DBS, the earlier rally of the Trump administration, which boosted the dollar, is now losing its pace as the controversy arises regarding the nominations and the situation of the Russia-Ukraine war gets worse. These situations have bound the investors to relook at Trump`s economic agenda, or else it could lead to more uncertainties in the market.
Federal Reserve May Slow Rate-Cut Path by 2025
From the longer point of view, the dollar trajectory is set to depend more on robust economic data and the possibility of growing further, while the Federal Reserve might slow its rate-cut path by the year 2025. Investors are also pulling back their expectations for an interest rate cut. However, the possibility rate is 57.3 % currently, with a minimal drop from 58.7 % previously, and earlier this month it was around 76.8 %, while these reports are issued by the CME’s FedWatch Tool.
Chairman of the Federal Reserve, Jerome Powell, stated in the previous week that the economy shows no rush regarding the rate cut, which shows a strong
economic hold. As of this, the dollar rose about 0.9 %, reaching 154.84 yen, recovering from Tuesday`s sharp fall of 153.28 impacted by Russia`s news. The euro stabilised at 1.0598 dollars, which was higher than its previous low of 1.0524 dollars; also, the bitcoin remained steady at 91952 dollars, which was quite lower than its record high of 94078 dollars.
Likely Move in Economic Policies with Bakkt Crypto Firm
The Financial Times has issued a report that Donald Trump`s social media company is in the process of acquiring the Bakkt crypto firm, as he is promoting crypto-friendly policies under his administration. This has the potential to signal a shift of integration of digital assets into major economic policies for the betterment of the crypto industry. The news has boosted the investors’ confidence, as the Trump government is likely to favors deregulation and open up opportunities for growth in the rapidly increasing and evolving cryptocurrency sector.
