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The dollar reached its highest level since July, driven by the U.S. elections developments while Trump led the presidential race.
The Republican victory in the White House, Senate and potentially the House of Representatives, where Republicans could gain control of all branches of the government, strengthened the dollar.
This scenario of a unified government could enable the implementation of the Republican party’s fiscal and economic reforms, further boosting the dollar.
As a result, U.S. yields are rising across all maturities, with the 10-year climbing to 4.4 percent, as investors anticipate an expansionary fiscal policy that could intensify inflationary pressures. This environment has raised expectations surrounding Fed Chairman Jerome Powell’s upcoming speech on Thursday, which will be crucial for insights into interest rate direction. A dovish tone could moderate the dollar’s recent rally, while a hawkish stance would likely reinforce the currency’s strength.
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