US Dollar hits strongest level in six months

Mon, 11/11/2024

by Ellie LeTu

Source: Financial Times

• Strong US dollar following Trump victory

  • Dollar index rose by 0.6%, its highest level since May.

    • Measures US Dollar against a basket of peer currencies.

  • Sharp moves in the US Dollar can destabilize the entire global economy.

    • The US Dollar is on one side of nearly 90% of all FX trades globally.

• Inflation fears return

  • Trump’s proposed tariffs could drive up prices again.

  • Tariffs will make everything more expensive in the short term.

    • Takes time to move production from overseas back to the US.

  • Trump’s tax cuts and other growth policies could cause the economy to overheat once more.

• Looking ahead

  • Investors have scaled back expectations for Fed rate cuts.

  • The Fed remains cautious with heightened inflation risks in Trump’s second term.

  • A third consecutive rate cut is still expected at the next meeting.