Investing.com – The U.S. dollar rose Monday, continuing the positive tone generated by the new Trump presidency ahead of the release of key inflation data and with a number of Federal Reserve speakers due this week.

At 04:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.3% higher to 105.207, after gaining 0.6% last week.

Dollar maintains strength 

The dollar surged to a four-month high last week after Donald Trump claimed a return to the White House, with its tariff and immigration policies seen as inflationary, and thus likely to prompt the Federal Reserve to reduce rates at a slower and shallower pace.

While the greenback’s rally was stalled by an interest rate cut by the Federal Reserve, it still retained a bulk of its recent gains.

“The thesis for dollar bears now is that it will take a while for tariffs to come through and the Federal Reserve’s recalibration to less restrictive monetary policy – plus end-year dollar seasonal patterns – could see a benign decline in the dollar into year-end,” said analysts at ING, in a note. 

“We disagree and think this clean election result can boost US consumer and business sentiment at the same time as it weighs on business sentiment elsewhere in the world.”

Trading is likely to be light Monday (NASDAQ:) with U.S. bond markets closed for a public holiday, with attention turning to the release of data for October, due on Wednesday.

A slew of Federal Reserve officials are also set to speak this week, after the bank cut interest rates by 25 basis points last week. 

Euro heading lower

In Europe, dropped 0.3% to 1.0688, weighed by Trump’s proposals for tariffs on imports, which could hurt European exports, as well the political turmoil in Germany, the eurozone’s biggest economy.

German Chancellor Olaf Scholz last week sacked his finance minister, paving the way for a snap election after months of disagreements in his three-party coalition.

The latest reports suggest “a no-confidence vote could be held in December and a snap election as early as February. It seems a leap of faith at this stage to expect a complete turnaround in the German fiscal position and instead the onus will be on the European Central Bank to support the eurozone economy,” ING added, expecting the ECB to cut by 50 basis points in December.

fell 0.2% to 1.2900, after the delivered its second rate cut since 2020 on Thursday, dropping by 25 basis points to 4.75% from 5%.

BoE Governor Andrew Bailey makes an important Mansion House speech on Thursday, as traders look for monetary policy guidance in the wake of the Labour government’s expansionary budget.

“Given that the UK economy has been performing quite well and Donald Trump’s policies could prove inflationary, Bailey may not want to repeat his narrative that UK rates could be cut faster than expected,” said ING. 

Yuan slips after new debt package

climbed 0.2% to 7.1934, remaining close to three-month highs after China’s National People’s Congress outlined plans for more fiscal spending. 

The NPC approved a 10 trillion ($1.4 trillion) debt package last week, aimed at easing local government debt levels. But the measure disappointed investors hoping for more targeted, fiscal measures.

rose 0.8% to 153.83, with the yen falling after the Bank of Japan’s October meeting showed policymakers were split over more interest rate hikes, sparking more uncertainty over when the BOJ will raise interest rates further. 

This uncertainty bodes poorly for the yen, which was already battered by increased political uncertainty in Japan after the country’s ruling Liberal Democratic Party lost its parliamentary majority last month.

Investing.com– Most Asian currencies moved in a small range on Monday (NASDAQ:) as traders took little cheer from more fiscal spending in China, while the dollar steadied ahead of key consumer inflation data this week.

Regional currencies were nursing steep losses in recent sessions as the dollar firmed sharply on Donald Trump winning the 2024 presidential elections. While the greenback’s rally was stalled by an interest rate cut by the Federal Reserve, it still retained a bulk of its recent gains.

The Japanese yen and the Chinese yuan were among the worst hit by this trade, while broader Asian currencies also mostly retreated.

The and both rose slightly in Asian trade, with focus turning to data for October, due later in the week. A slew of Federal Reserve officials are also set to speak this week, after the bank cut interest rates by 25 basis points last week. 

Chinese yuan softens as stimulus underwhelms 

The Chinese yuan’s pair rose 0.1%, remaining close to three-month highs after China’s National People’s Congress outlined plans for more fiscal spending. 

The NPC approved a 10 trillion ($1.4 trillion) debt package last week, aimed at easing local government debt levels. But the measure disappointed investors hoping for more targeted, fiscal measures.

Beijing did signal that more stimulus was on the way, but did not specify the timing of the planned measures. Analysts at ANZ said China was likely holding back on stimulus until it was clear how U.S. policy would stand towards the country after Trump takes over as President. 

Trump has vowed to impose steep import tariffs against China, which bode poorly for the economy, which is already grappling with slowing growth.

Data released over the weekend showed Chinese slowed in October, while shrank for a 25th consecutive month.

ANZ analysts said they were now looking to high-level Chinese political meetings in December for more insight into stimulus measures. Markets are watching for measures aimed at boosting private consumption and the property market crisis. 

Japanese yen weakens amid BOJ uncertainty 

The Japanese yen weakened on Monday, with the pair rising 0.5% and remaining close to recent three-month highs. 

Summary of opinions of the Bank of Japan’s October meeting showed policymakers were split over more interest rate hikes, sparking more uncertainty over when the BOJ will raise interest rates further. 

This uncertainty bodes poorly for the yen, which was already battered by increased political uncertainty in Japan after the country’s ruling Liberal Democratic Party lost its parliamentary majority last month.

Broader Asian currencies kept to a tight range after clocking recent losses against a strong dollar.

The South Korean won’s pair rose slightly, while the Singapore dollar’s pair rose 0.2%.

The Australian dollar’s pair added 0.2%, while the Indian rupee’s pair remained close to record highs around 84.4 rupees.

By Stefano Rebaudo

(Reuters) – The euro dropped to its lowest level in 6-1/2 months against the greenback on Monday (NASDAQ:) as investors worried about possible U.S. tariffs that would hurt the euro area’s economy.

Meanwhile the — a measure of its value relative to a basket of foreign currencies — slightly overshot the highs seen right after the U.S. presidential election with markets still waiting for clarity about future U.S. policy.

The sensitivity of the euro to the threat of higher U.S. import tariffs was evident late Friday when media reported that President-elect Donald Trump was lining up Robert Lighthizer, seen as a hawk on trade, to run his trade policy, analysts said.

Sources familiar with the matter said Trump has not asked Lighthizer to return to the agency overseeing trade policy.

The single currency was down 0.6% at $1.0657, after hitting $1.0656, its lowest level since May 1. It dropped 0.78% on Friday.

Politics remained under the spotlight after German Chancellor Olaf Scholz paved the way for snap elections. However, the risk of policy changes in Germany which could lead to a looser fiscal policy will be rising next year.

“The thesis for dollar bears now is that it will take a while for tariffs to come through and the Fed recalibration to less restrictive monetary policy,” said Chris Turner, head of forex strategy at ING.

“We disagree and think this clean election result can boost U.S. consumer and business sentiment at the same time as it weighs on business sentiment elsewhere in the world,” he added.

The was 0.45% firmer at 105.44, after hitting 105.50, its highest since July 3. Last week, it jumped more than 1.5% to 105.44, after U.S. presidential election results showed Trump’s victory.

MIXED VIEWS ON THE GREENBACK

Trump “will be less encumbered by the political considerations of having to run for office again,” said Libby Cantrill, head of U.S. public policy at PIMCO.

“However, what look to be narrow congressional margins – potentially historically narrow in the House – could be a check on Trump’s agenda, fiscal and otherwise,” she added.

Measures from the U.S. President-elect — including tariffs and tax cuts — should put upward pressure on inflation and bond yields while limiting the Fed’s scope to ease policy and supporting the greenback.

Lee Hardman, senior currency analyst at MUFG, flagged a media report suggesting earlier this year that Lighthizer was considering weakening the greenback.

“Higher tariffs could be used to force other countries to agree to revalue their currencies against the U.S. dollar,” he said, mentioning the Plaza Accords in 1985.

The Plaza Accords was an agreement between five major economies to depreciate the greenback through coordinated currency market interventions.

The dollar gained 0.8% on the yen to 153.80, having been dragged off last week’s top of 154.70 by the risk of Japanese intervention. On Nov. 6 it hit 154.68, its highest level since July.

A summary of opinions from the Bank of Japan’s October policy meeting showed some members were unsure on when to raise rates also due to political uncertainty.

The rate outlook will be crucial for the greenback while all major central banks ease their monetary policy.

The U.S. bond market is closed for a public holiday on Monday, though stocks and futures are open.

Citi expects U.S. rates to stay close to current levels in the near term as the market is caught between expectations of significant policy changes in 2025 and the easing cycle driven by near-term data.

Disappointment at the latest Chinese stimulus package had seen the Australian and New Zealand dollars slide on Friday.

The U.S. dollar versus the hit its highest since early August at 7.2225, up 0.4% on Monday. It jumped 0.70% on Friday after falling 0.75% the day before.

Highlighting the bleak background in China, data out over the weekend showed consumer prices rose at the slowest pace in four months in October, while producer price deflation deepened.

soared to a record high above $81,000 on Monday on expectations that crypto-currencies will boom in a favourable regulatory environment following the election of Trump as U.S. president and pro-crypto candidates to Congress.