Dollar Rises to Yearly High as Trump’s White House Win Keeps Powering Gains

Anya Andrianova
·2-min read

(Bloomberg) -- The dollar rose Monday, touching its highest level in a year as the US currency added to advances fueled by Donald Trump’s win in the presidential race.

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The Bloomberg Dollar Spot Index rose as much as 0.7% Monday to the highest level since November 2023, with traders betting that Trump’s trade policies will boost the greenback and weigh on major currencies, including the euro. The yen was the worst performing currency among developed-world peers on Monday. The dollar index later curbed its move later in the day, trading 0.5% up.

The dollar was also aided by the Federal Reserve, which cut its benchmark interest rate by a quarter point last week following a half-point move in September. The US central bank avoided clear guidance on the timing and the speed of additional rate reductions.

The greenback is advancing after six straight weekly gains, as data points to solid US economic growth. Meanwhile, weaker economic expansion elsewhere in the world is pushing central banks to lower borrowing costs, weighing on local currencies.

Hedge funds, asset managers and other investors held some $17.6 billion in bullish dollar positions during the week ended Nov. 5 — before the election results were known, data from the Commodity Futures Trading Commission showed Friday. The positioning marks a reversal from a negative outlook in mid-October in the lead-up to the election.

There are several factors supporting the dollar “for the foreseeable future,” according to Paresh Upadhyaya, director of fixed income and currency strategy at Amundi US Inc. “The market is finally beginning to take the risks of tariffs and its significance to the global and domestic growth and inflation outlook more seriously,” he said.

Trump’s election will impact both the euro and the Fed’s rate-cutting cycle, said Jane Foley, head of FX strategy at Rabobank. “The European Central Bank has embarked on a more dovish course and it’s our view that as a result of the inflationary impulses of Trump’s policies, the Fed’s easing cycle will be cut short,” she said.

The euro can decline to $1.05 in the coming next three months, Foley said. The common currency fell 0.6% against the greenback on Monday, trading at $1.0657 and prompting investors to weigh if the euro could reach parity with the dollar.

Republicans appear close to securing the House of Representatives in addition to the Senate, which would allow them to smooth the way for Trump’s planned tax cuts, his immigration and trade policies and his nominees.

“The election outcome amplifies the dollar exceptionalism,” JPMorgan & Chase Co. strategists led by Meera Chandan wrote in a note. “No other currency has what the dollar has: superior growth and equities, higher yield, defensive attributes.”

--With assistance from Carter Johnson.

(Updates prices throughout)

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