By Chibuike Oguh and Alun John

NEW YORK (Reuters) – The U.S. dollar strengthened against major peers on Thursday, trading at a one-year high and headed for a fifth straight session of gains, propelled by market expectations since Donald Trump clinched a dramatic return to the White House.

Markets anticipate that the incoming Trump administration will impose trade tariffs and tighten immigration as well as deepen the deficit, measures deemed to be inflationary.

The president-elect’s Republican Party will control both houses of Congress when he takes office in January, Edison Research projected on Wednesday, giving him wide powers to push his agenda.

The greenback climbed above 156 yen for the first time since July and was last up 0.56% to 156.38 per dollar. The euro slumped to its weakest since November 2023 and was down 0.45% at $1.05165 in choppy trading. Sterling hit its lowest on the dollar in four months and was last down 0.44% to $1.2651.

Following his election, the market has been looking at Trump’s appointment and seeing that he is not going to compromise on his campaign goals, whether it’s tariffs or China, said Steven Englander, head of G10 FX strategy at Standard Chartered (OTC:) in New York. “The market is assuming that he’s going to go ahead and implement all the things that he’s promised to do,” he said.

U.S. producer prices picked up in October, the Labor Department reported on Thursday, a day after data showed that consumer inflation had barely budged last month. The number of Americans filing new applications for unemployment benefits fell last week, suggesting labor market strength, according to the Labor Department.

The data did not change views that the Federal Reserve would deliver a third interest rate cut next month.

Fed chair Jerome Powell said on Thursday there was no need to rush rate cuts given the strong U.S. economy. His speech echoed earlier comments on Thursday by Federal Reserve governor Adriana Kugler and Richmond Fed President Thomas Barkin.

The , which measures the currency against six top counterparts including the euro and the yen, rose 0.17% to 106.64, after reaching as high as 107.07, its highest since early November 2023. The yield on benchmark U.S. 10-year notes fell 3.7 basis points to 4.414%.

pulled back from a record high of $93,480 overnight and was last up 0.96% to $89,489. Trump has vowed to make the United States “the crypto capital of the planet.” declined 0.27% to $3,144.

The Swiss franc remained under pressure against the dollar, which was up 0.3% to 0.889 franc. The Australian dollar fell to a three-month low after marginally weaker jobs data, weakening to as low as $0.6453.

“The price action that we’ve had is expected given the election outcome and the logic behind it is built on expectations rather than actualities: expectations of fiscal stimulus, tariffs and deregulation,” said Daragh Maher, head of FX strategy, Americas, at HSBC in New York.

“We’ve been in the dollar-bullish camp, so this seats neatly with our narrative, but clearly there’s been a big repricing.”

Investing.com — UBS has raised its forecast for the in a note Thursday, expecting significant fluctuations in the exchange rate over the coming year.

The bank now projects the currency pair to reach 155 by December 2024, followed by 152 in March 2025, 150 in June, and 147 in September.

By year-end 2025, UBS targets 145, a revision from its earlier predictions of 147, 143, 140, and 138, respectively.

According to UBS, a near-term surge to 158-160 remains possible, especially if U.S. 10-year yields rise another 30-40 basis points, potentially hitting 4.8%.

“Based on sensitivity analysis over the past three years, a 10bp widening of the US-Japan 10-year yield differential coincides with a one-yen rise in the USDJPY exchange rate,” UBS explained.

If U.S. bond yields indeed spike to 4.8%, the bank says USD/JPY could temporarily reach 160, though they view this level as “unsustainable” and likely to invite Japanese intervention, as observed during similar peaks earlier in 2024.

UBS analysts believe the USD/JPY will face downward pressure in 2025, driven by several factors. A key factor is the anticipated Fed rate-cutting cycle, which UBS expects will lead to lower U.S. yields.

“We think current USDJPY levels are higher than justified by yield differentials,” UBS notes, estimating that the currency pair should trend toward 145-146.

Additionally, trade tensions and a potential Trump-led administration’s focus on a stronger yen may reinforce this trend.

For investors, UBS suggests that any near-term spike toward 160 could be an opportunity to “tactically sell USDJPY.” Over the long term, UBS sees multiple forces supporting a downtrend, with USD/JPY likely to end 2025 at 145.

LONDON (Reuters) – The pound dropped to its lowest against the dollar since early July on Thursday, brushed aside by the U.S. currency’s relentless rise following Donald Trump’s U.S. election victory.

Those developments are swamping British news for investors, although they will be keeping an eye on finance minister Rachel Reeves’ first Mansion House speech to leaders of the City, as well as remarks from Bank of England governor Andrew Bailey.

Reeves said in advance that she wants Britain to build a slew of “megafunds” with up to 80 billion pounds ($102 billion) in fresh investment firepower, under plans for the biggest shake-up in British pensions seen in decades.

Sterling was last down 0.6% on the dollar at 1.2632, its lowest since July 2, falling through its early August low in mid-morning London trading.

The move was largely in line with peers. The euro was down 0.6%, at a one year low, and the dollar was around 0.5% higher on the Japanese yen and the Swiss franc. [FRX/]

“Cable (pound/dollar) is a dollar story at the moment,” said Nick Rees, currency analyst at Monex Europe.

Higher trade tariffs and tighter immigration under the incoming Trump administration are projected to fuel inflation, potentially slowing the Federal Reserve’s rate cutting cycle longer term.

These, alongside expectations for deeper deficit spending and higher short term economic growth are lifting Treasury yields, providing the dollar with additional support.

The benchmark hit 4.483% on Thursday, its highest since July. [US/]

The pound was steady on the euro at 83.12 pence to the common currency. It has been gradually strengthening in recent months, “a reflection of European political risk which should be negative for the euro,” said Rees, pointing to the situation in France and Germany.

The collapse of Germany’s ruling coalition last week forced the country into a snap election that will is likely to take place in February, while the French government is trying to push its draft budget for next year over the line, despite lacking a majority in parliament.