Nov 14, 2024 (MENAFN via COMTEX) --
(MENAFN) The dollar remained close to a 6.5-month high against major currencies on Wednesday, while the Japanes Yen dropped to its lowest level since July. This movement in the currency markets was largely driven by speculative bets on US President-elect Donald Trump's upcoming policies. The dollar has strengthened since Trump's victory in last week's presidential election, reaching its highest level since May 1, at 106.21 against a basket of major currencies.
Investors are optimistic that the new administration will implement tax cuts and import tariffs, policies expected to lead to higher inflation. This inflationary pressure could prompt the Federal Reserve to slow the pace of interest rate cuts, which has supported the US dollar in recent days. At the same time, the Republican Party is edging closer to full control of Congress, potentially giving Trump the power to advance his political agenda.
The US consumer price index for October came in as expected, rising to 2.6 percent from 2.5 percent in November, signaling that inflation is gradually picking up. This could mean the Federal Reserve may delay a third interest rate cut. Investors are betting that the rise in inflation may give the Fed a reason to halt its rate cuts, which could provide support for dollar-denominated assets.
The CME Group's FedWatch tool indicates that markets are now pricing in a 62 percent chance of a quarter-point rate cut by the Federal Reserve in December, a drop from the 84 percent chance estimated a month ago. The dollar index, which tracks the US dollar against six major currencies, fell by 0.085 percent to 105.31 after rising for three consecutive sessions. Federal Reserve Chairman Jerome Powell is scheduled to speak on Thursday ahead of Friday's retail sales data release.
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COMTEX_459812451/2604/2024-11-14T16:27:31
