The dollar index (DXY00) today is up sharply by +1.58% at a 4-month high. The dollar is soaring today after Republican candidate Trump won the US presidential election. There is concern that Trump’s low tax and high tariff policies will boost inflation and slow the pace of Fed interest rate cuts, a bullish factor for the dollar and a bearish factor for gold. Today’s jump in the 10-year T-note yield to a 4-month high also strengthens the dollar’s interest rate differentials.
The markets are discounting the chances at 99% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.
