The US dollar has seen a major gain after Trump’s victory. It reached the highest since April of this year. The dollar index is the measurement of the value of USD against a basket of foreign currencies such as Euro and Yuan. According to MarketWatch on the 14th of November the dollar index hovered around 106.50 while hitting 106.58 occasionally. It’s up by almost 2 points with a 2.5% increase just from a month ago.U.S. Dollar and Bitcoin Gain Ground after Trump’s Announcement
Trump’s policies are fueling the growth of the US dollar against most currencies. It’s mainly due to the fact Trump wants to introduce inflationary tariffs. He wants to reduce the tax burden on Americans by lowering taxes and combat illegal immigration.
The US consumer price index (CPI) has been growing at a rate of 0.2 percent over the past four months. The Bureau of Labor Statistics showed CPI has increased 2.4 percent in a year. So the prices of goods have increased, placing extra burden on Americans.
The recent Fed rate cut has impacted the dollar value. But high tariffs will push up prices. This in turn will give the Fed much less options when they want to cut interest rates. If the Fed can’t cut rates this will have a negative result on the yield of bonds. Bonds have an inverse relation with interest rate. So the yield on bonds will fall significantly.
Trump’s win made a huge impact in the crypto market. Later Trump announced he will make the US “Crypto Capital of the Planet”. He wants to loosen the regulations around crypto currencies. So the market found a new boost.
At the time of writing 1BTC had a value of $92,350. It was up by 3.35% in a single day. Bitcoin doesn’t show any sign of slowing down. The crypto currency hit the 90k mile marker for the first time after Trump’s announcement. We can predict that it won’t be long before bitcoin is surfing in the 100k area.
Europe stands to lose the most with the increasing tariffs. With the threat of high tariffs looming over the euro has lost its value against the greenback. The Euro has lost nearly 1.5% of its value against USD in the last 5 days. Against the dollar the euro was sitting at 1.05 on the 14th of November.
On the eastern front the dollar rose by 0.65% against yen reaching 155.58 yen per dollar on 14th of November. This presents the Japanese central bank a challenge to balance their economy.
So the rate cuts and decisions by the Trump administration is fueling the dollar rise. The new tariff rules will have an impact on the European economy as they are the main target. And to top it off we will probably see more rise in the price of bitcoin.