Dollar Jumps on Rate Bets. U.S. Stocks are at Records.
The dollar jumps and has strengthened against all of its major peers. Treasuries have weakened and U.S. stocks churned to fresh all-time highs. Investors are speculating that the Trump administration will revert attention to implementing pro-growth policies. At the same time, the Federal Reserve has hinted at rate hikes.
Trump spent the first weeks of his tenure in the White House taking swipes at other countries’ trading policies. This pushed the dollar to a two-month low. Nevertheless, investors are still holding out hope he will turn toward the spending and tax cuts he touted in his campaign. Across the Atlantic, political risk is pressuring the euro. French presidential candidate Marine Le Pen laid out a manifesto that included taking the country out of the common currency.
“The dollar will go higher from here.” This according to Adam Cole, head of global foreign-exchange strategy in London at Royal Bank of Canada. “On balance Trump’s policies are dollar positive and that will win over the rhetoric.”