The dollar rose to its highest level in 13 months on Friday, continuing its rise amid investors’ assessment of the expectations of the Federal Reserve’s path regarding interest rates, and Bitcoin – the most prominent cryptocurrency – reached a record level approaching $100,000.
The dollar index rose 0.08% to 107.15 after touching the highest level since October 4, 2023 at 107.18, and there are no expected data that may curb its rise.
“It’s now just a matter of trying to figure out the motivating factors… and it’s obviously a matter of whether or not the Federal Reserve will cut interest rates” next December, said Tony Sycamore, a market analyst at IG.
According to the CME Group’s “Feed Watch” service, expectations regarding next month’s move are volatile. Investors expect 57.8% to cut interest rates by 25 basis points, compared to 72.2% a week ago.
The dollar has risen by about 3% since the beginning of the month amid expectations that US President-elect Donald Trump’s policies will bring inflation back up, limit the Federal Reserve’s ability to lower interest rates, and keep other currencies under pressure.
The decline of major currencies against the dollar:
- The British pound fell 0.14% in the latest trading to $1.25705, and earlier touched the lowest level against the dollar since May 14 at 1.25655.
- The euro, which forms a large part of the dollar index, fell by 0.05% to $1.0469 after falling yesterday, Thursday, to its lowest level in 13 months, recording $1.0461. The euro became one of the main victims of the rise achieved by the dollar after the US elections. The recent escalation between Russia and Ukraine and political uncertainty in Germany – the largest economy in the European Union – were among the reasons for increasing pressure on the European currency.
- The Japanese yen has fallen by slightly more than 7% against the dollar since last October and fell below 156 against the dollar last week for the first time since July, raising the possibility that the Japanese authorities will take steps again to support the currency. The dollar rose in recent trading by 0.2% to 154.84 yen.
- The New Zealand dollar reached its lowest level in a year at $0.58265 with increasing expectations that the country’s central bank may resort to cutting interest rates by 75 basis points next week.
The New Zealand dollar reached its lowest level in a year at $0.58265 with increasing expectations that the country’s central bank may resort to cutting interest rates by 75 basis points next week.
Bitcoin’s continued rise
In the cryptocurrency market, Bitcoin rose briefly to a record level of $99,388 before the gains retreated. The cryptocurrency has increased by more than 40% since the US elections on November 5, driven by expectations that President-elect Donald Trump will ease regulations on cryptocurrencies. In the latest trading, it rose 1% to $99,028.
Cryptocurrencies have gained a prominent position in politics, at a time when Bitcoin is seen as a trade among Trump’s “trades”, which embraced digital assets during his election campaign.
“Trump trades” mean demand for assets that are likely to be supported by his policies after his return to the presidency.
Bloomberg News reported last Wednesday that Trump’s team is in discussions with the digital assets sector about creating a new position in the White House dedicated solely to cryptocurrency policy.
More than $4 billion has flowed into Bitcoin exchange-traded funds in the United States since the election.
Stocks related to cryptocurrencies rose in conjunction with the price of Bitcoin, and shares of the Bitcoin mining company, Mara Holding, jumped by about 14% at the end of Wednesday’s trading, and the shares of MicroStrategy, a loss-making software company that was buying Bitcoin, rose 10%, bringing its market value to more than $100 billion.
The market value of all Bitcoin units traded in the markets exceeded $1.92 trillion, out of the total market value of cryptocurrencies, which was estimated at more than $3.18 trillion.
