Written by Kevin Buckland
TOKYO (Reuters) – The U.S. dollar hit a one-year high against major currencies on Thursday, heading for a fifth straight day of gains, boosted by rising yields and Donald Trump's election victory.
The dollar rose above 156 yen for the first time since July. The euro fell to $1.0546, the lowest since November 2023, and the pound hit a three-month low against the dollar at $1.2683.
Higher trade tariffs and stricter immigration measures under the incoming Trump administration are expected to accelerate inflation, potentially slowing the Fed's rate-cutting cycle in the long term. Expectations of a widening budget deficit are pushing up U.S. bond yields, providing further support for the dollar.
Edison Research predicted Wednesday that when the next president takes office in January, Republicans will control both chambers of Congress, giving him broad authority to advance policy.
“The US dollar is a magic currency backed by carry, momentum, growth differentials (and) impending fiscal and tariff kickers,” said Chris Weston, head of research at Pepperstone.
“Although the trend will not continue forever until the US economy starts to collapse, it is possible that increasingly rich positions in the US dollar will prove to be the main factor that could cause a tradeable decline. Highly sexual.”
Cryptocurrency Bitcoin also hit a new record high of $93,480 overnight and was climbing towards that level on Asia Day. President Trump has vowed to make the United States the “crypto capital of the planet.”
The index of currencies against the dollar against the top six countries, including the euro and the yen, rose 0.2% to 106.69, the highest since early November 2023.
The dollar briefly fell on Wednesday after U.S. consumer inflation was in line with economists' expectations and the Federal Reserve remained on track to cut interest rates at its December meeting.
Long-term government bond yields also rose Wednesday, extending their gains in the Asian morning, rising to 4.483% for the first time since July 1. [US/]
Elsewhere, the Australian dollar fell to a three-month low at US$0.6464 on slightly weaker jobs data.
IG analyst Tony Sycamore said: “Australia's job growth has been stronger than expected for a long time, but today's slowing job growth reflects the cooling of an exceptionally resilient labor market. There are some indications that there is.”
“This gives the central bank leeway to maintain its focus on inflation and keep interest rates in restrictive territory until the end of the year, without any signs of significant deterioration in the labor market.”
