NEW YORK (Reuters) -The U.S. dollar firmed on Wednesday, hitting an 11-week high, as investors ruled out a hefty interest rate cut from the Federal Reserve at the next policy meeting and priced in a potential election victory by former President Donald Trump.
Sterling, meanwhile, tumbled to its lowest in two months after softer-than-expected British inflation data offered scope for the Bank of England to cut rates more forcefully, while the euro slid to an 11-week low ahead of a European Central Bank meeting.
But with U.S. presidential elections a few weeks away, investors’ focus has shifted to the highly-anticipated race, along with the Fed’s interest rate path.Trump’s plan to implement tax cuts, looser financial regulations, and higher tariffs is viewed as positive for the dollar. Higher tariffs, for instance, would have negative implications for growth in Asian and European exporters that could force their central banks to lower their interest rates, undermining their currencies, while lifting the dollar.
“Trump really went hard into the tariff conversation…although I think he’s just making a point that he’ll do whatever it takes to stop people from,” flooding the market with foreign products at the expense of U.S.-made goods.
“Combined that with overnight polling showing Trump necking ahead here…and that’s enough to leave the dollar at the top of the billing.“
Published on 21/10/2024
By Michael S.
