Dollar sags to one-week low after safety bid, 'Trump trade' momentum wanes
By Kevin Buckland
TOKYO, Nov 20 (Reuters) -The U.S. dollar slipped to a one-week low versus major peers on Wednesday, looking to extend a three-day decline from a one-week peak as the market catches its breath following the frantic rally in the wake of Donald Trump's election.
A boost to the dollar and other traditional safe-haven currencies like the yen overnight proved short-lived, after Russia's foreign minister said the country will "do everything possible" to avoid the onset of nuclear war, hours after Moscow announced it would lower its threshold for a nuclear strike.
Bitcoin pushed to a fresh all-time peak above $94,000, carried by expectations for a friendlier regulator environment for cryptocurrencies under Trump.
The dollar index =USD - which measures the currency against six major peers, including the yen and euro - fell to a low of 106.07 for the first time since Wednesday of last week, and stood at 106.18 at 0247 GMT.
The index climbed to a one-year high of 107.07 on Thursday, buoyed by expectations for big fiscal spending, higher tariffs and tighter immigration under the incoming U.S. administration, measures which economists say could foster inflation and potentially slow Federal Reserve easing.
Investors are still waiting for Trump to name a Treasury Secretary, following the announcement of several other high-profile appointments, including Wall Street CEO Howard Lutnick as head of the Commerce Department.
Some of Trump's picks have provoked controversy for their relatively meagre relevant experience.
"The 'Trump Trade' that boosted the greenback is facing challenges from Trump's controversial cabinet nominations and the escalation in the Russian-Ukraine war," DBS strategists wrote in a client note.
For the dollar over longer term though, "more weight should be put on firm economic data and the increasing likelihood that the Fed may have to slow the rate cut path even more in 2025", they said.
Traders continue to pare back expectations for an interest-rate cut at the Fed's next meeting in December. Odds now stand at 57.3%, down from 58.7% a day earlier, according to CME's FedWatch Tool. A month ago, wagers were at 76.8%.
Fed Chair Jerome Powell said last week that "the economy is not sending any signals that we need to be in a hurry to lower rates", following a run of robust economic indicators.
The dollar added 0.9% to 154.84 yen JPY=EBS after falling sharply to 153.28 on Tuesday following the Russia news.
The euro held steady at $1.0598 EUR=EBS, having recovered from a drop to $1.0524 in the previous session.
Bitcoin BTC= was flat at $91,954 after earlier climbing to a record $94,078.22.
The Financial Times reported that Trump's social media company was in talks to buy crypto trading firm Bakkt BKKT.N, bolstering hopes of a cryptocurrency-friendly regime under his administration.
World FX rates https://tmsnrt.rs/2RBWI5E
Reporting by Kevin Buckland
Editing by Shri Navaratnam
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
