Trump bluster sends dollar soaring to 14-yr high
london — The dollar powered to its highest levels since 2003 against a basket of currencies on Friday, with Donald Trump’s victory in the US presidential election helping to give the greenback its best fortnight against the yen in almost 30 years.
Further underpinning the dollar was a speech by Federal Reserve Chair Janet Yellen, who on Thursday provided a signal that US interest rates would rise next month, in line with most market participants’ expectations.
The greenback hit a six-month high against the yen of 110.925. It has gained around 7 per cent in the last two weeks against the Japanese currency.
This was its strongest showing since January 1988 and its second-strongest performance in the era of floating exchange rates. The dollar index, which measures the currency against a basket of six major rivals, hit 101.37, its highest since early April 2003.
london — The dollar powered to its highest levels since 2003 against a basket of currencies on Friday, with Donald Trump’s victory in the US presidential election helping to give the greenback its best fortnight against the yen in almost 30 years.
Further underpinning the dollar was a speech by Federal Reserve Chair Janet Yellen, who on Thursday provided a signal that US interest rates would rise next month, in line with most market participants’ expectations.
The greenback hit a six-month high against the yen of 110.925. It has gained around 7 percent in the last two weeks against the Japanese currency, its strongest showing since January 1988 and its second-strongest performance in the era of floating exchange rates. The dollar index, which measures the currency against a basket of six major rivals, hit 101.37, its highest since early April 2003.
“What we’re looking at is a broad shift of investment back to the US,” said Richard Cochinos, Citi’s head of G10 currency strategy in London.
The euro hit an 11-month low of $1.0582 before recovering to trade flat on the day at $1.0620.
The single currency is on track to record its weakest fortnightly performance against the dollar in 20 months.
China’s yuan — which is on track for its biggest yearly falls since 1994 — hit a fresh eightyear low. —
london — The dollar scaled to its highest level in almost 14 years against a basket of currencies on Friday, while US bond yields were set for the biggest fortnightly rise in 15 years on bets US inflation and interest rates are headed higher.
A growing perception that the economic policies of US Presidentelect Donald Trump will push up consumer prices helped put the dollar on track for its biggest twoweek rise against the Japanese yen in almost 30 years.
European shares nudged lower in early European trade , while Italian bonds bore the brunt of selling in regional debt markets, with borrowing costs set for their biggest two-week rise since the 2012 eurozone debt crisis.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.4 per cent to hover just above four-month lows touched earlier in the week. It looked set to log its fourth straight week of losses.
The dollar’s rise against the yen raised hopes of an earnings boost to Japanese exporters, lifting Japan’s Nikkei average to a 10-month high. The blue-chip stock index closed 0.6 per cent higher.
Data on Thursday suggesting the US jobs market is tightening and inflation is gaining traction have bolstered a view that US growth and inflation could accelerate if the Trump administration cuts taxes and increases fiscal spending.
Last week’s unexpected US election result has prompted investors to ditch their once rock-solid conviction that growth in developed economies will remain tepid because of tough competition from emerging market economies with lower wages.
That has led to a repricing of assets, witnessed most notably in currency and bond markets.
“What we’re looking at is a broad shift of investment back to the US,” said Richard Cochinos, Citi’s head of G10 currency strategy in London. “There are expectations for tax cuts next year — which were part of the Trump campaign’s
There are expectations for tax cuts next year... and then there’s also the idea of what type of fiscal boost are you going to have
Richard Cochinos, Head of G10 currency strategy at Citi
promises — and then there’s also the idea of what type of fiscal boost are you going to have. That’s what’s driving asset prices — it’s people’s expectations for the fiscal impulse next year,” he said.
The 10-year US Treasury yield rose to 2.34 per cent, its highest since December. It is up about 55 basis points over the last two weeks — the biggest fortnightly rise in 15 years and the second biggest in almost 30 years.
In Europe, Italian 10-year bond yields rose eight basis points to 2.12 per cent, racking up 44 bps over the last fortnight in its biggest surge since May 2012. —