The market continues to speculate on the "Trump trade" as the US dollar reaches a one-year high.

As the market continues to speculate on Trump's trade, the US dollar continues to strengthen, rising on Monday to its highest level in a year. The Bloomberg US Dollar Spot Index rose by 0.7% on Monday, reaching its highest level since November 2023, as traders bet that Trump's trade policies will boost the dollar and suppress major currencies including the euro. The yen was the worst-performing currency among developed countries on Monday. The US Dollar Index narrowed its gains to 0.5% at the end of Monday. On Monday, the US dollar rose by 0.70% against the yen to 153.71 yen, remaining in a continuous upward trend throughout the day. The euro fell by 0.60% against the US dollar to 1.0654, the pound fell by 0.40% against the US dollar to 1.2870, and the US dollar rose by 0.55% against the Swiss franc to 0.8805. The US dollar was also boosted by the Federal Reserve. Following a 50 basis point rate cut in September last year, the Fed cut its benchmark interest rate by 25 basis points last week, but did not provide clear guidance on the timing and pace of further rate cuts. With data showing steady economic growth in the US, the dollar continued to rise after six consecutive weeks of gains. Meanwhile, slowing economic expansion in other regions of the world is prompting major central banks to lower borrowing costs, putting pressure on local currencies. Data from the US Commodity Futures Trading Commission (CFTC) released on Friday showed that hedge funds, asset management companies, and other investors held about $17.6 billion in bullish dollar positions in the week ending November 5th. This positioning marks a reversal from the negative outlook before the mid-October election. Paresh Upadhyaya, head of fixed income and currency strategy at Amundi US Inc., said, "There are several factors supporting the dollar in the foreseeable future, as the market is finally taking the risks of tariffs and their impact on global and domestic inflation prospects more seriously." Jane Foley, head of foreign exchange strategy at Rabobank, said that Trump's election will affect the euro and the Fed's rate cut cycle. She said, "The ECB has already taken a more moderate approach, and we believe that the Fed's easing cycle will be shortened due to Trump's policy's inflationary impulse." Foley stated that the euro could fall to 1.05 against the US dollar in the next three months. The euro fell by 0.6% against the US dollar on Monday, to 1 euro to 1.0657 dollars, prompting investors to consider the possibility of the euro falling to parity. With Republicans seemingly set to gain control of both the House and Senate, they will be able to pave the way for Trump's tax cuts, immigration and trade policies, and his nominations. Meera Chandan, a strategist at JPMorgan, wrote in a report: "The election results have amplified the dollar's exceptionalism. No other currency has what the dollar has: superior economic growth, higher yields, and defensive assets."