Today, the US dollar rose significantly to reach a 13-month high, as the dollar index touched 107.18, achieving an increase of 0.08%. This rise came at a time when there is no major economic data that significantly affects the movement of the currency. While markets await the personal consumption spending data for October, which is due on the same day, expectations about the path of US interest rates have become volatile, with the chance of a rate cut in December falling to 57.8% from 72.2% last week. This change in forecast reflects fluctuations in monetary policy and their impact on the dollar.
On the other hand, Bitcoin witnessed a remarkable jump, surpassing the $99,000 barrier for the first time in its history, before retreating slightly around $99,028. The sharp rise in Bitcoin reflects optimism about the outlook regarding the policies of US President-elect Donald Trump, who investors believe may adopt a less stringent regulatory environment for cryptocurrencies, boosting demand for the digital currency.
The dollar has risen about 3% this month amid speculation that the Trump administration’s expected economic policies could lead to higher inflation, which could restrict the Fed’s ability to cut interest rates, thereby putting pressure on other currencies such as the euro. According to press reports, Trump is considering appointing Kevin as Treasury secretary, which could have a significant impact on the future of US monetary policy and the direction of the Federal Reserve in the coming years. The recent rise in the dollar reflects growing concerns about inflation and the weakness of some other major currencies, and underscores the crucial role the Federal Reserve plays in setting the direction of financial markets.
Relationship between Trump’s policies and rise of dollar
The relationship between the policies of US President-elect Donald Trump and the appreciation of the US dollar is a topic of particular interest in the financial markets. Since Trump’s victory in the US elections, markets have been affected by volatile expectations about his economic trends, which has been reflected in the strength of the US currency. Trump’s economic policies, which focused on tax cuts and increased government spending, were aimed at spurring economic growth and increasing inflation. These expectations of strong economic growth prompted many investors to increase their demand for the dollar, which helped raise its value against other currencies.
On the other hand, these policies coincided with high inflation rates in the United States, which may put the US central bank, the Federal Reserve, in a difficult position when it comes to setting interest rates. In this economic environment, the US currency becomes more attractive to investors, as they expect returns on US assets to remain high compared to foreign assets. Moreover, Trump’s policy of supporting business, especially by easing corporate legislation and cutting taxes, has created an atmosphere of optimism in financial markets, prompting increased capital flows to the United States. As demand for US assets increased, the dollar rose significantly.
Although some experts have warned that these policies could exacerbate the trade deficit and increase public debt, the market has been mainly focused on expectations of strong economic growth, which has increased demand for the dollar. This growth in value came at a time when currency markets were experiencing volatility, and the dollar is emerging as a safe haven for investors in times of uncertainty.
Factors affecting the price of the USD
The value of the US dollar depends on several economic and political factors that affect global markets. One of the most prominent factors is the monetary policies the US Federal Reserve adopts, with its decisions on interest rates driving the dollar’s value. When the central bank raises interest rates, the dollar attracts more foreign investment due to the high returns on dollar-denominated assets, boosting its value. Conversely, when the Federal Reserve decides to cut interest rates or keep rates low, it could lead to a decline in the value of the dollar, as yields become less attractive to investors.
On the other hand, US economic indicators play a big role in determining the direction of the dollar. Data such as GDP, the unemployment rate, and the consumer price index are all used to assess the health of the U.S. economy. When these indicators show an improvement in the economy, it boosts investors’ confidence in the dollar, raising its value. Conversely, any signs of declining economic growth or rising unemployment could lead to a weaker dollar
Political factors also have a significant impact on the value of the dollar. For example, trade tensions between the United States and other countries, such as the trade dispute with China, can negatively affect the dollar. Geopolitical tensions or any political uncertainty may cause investors to turn to safe currencies such as the Japanese yen or gold, leading to a depreciation of the dollar. In addition, US public debt is an important factor that may affect the price of the dollar.
