The dollar index surged to a five-month high on Tuesday amid ongoing expectations that protectionist measures by Republican President-elect Donald Trump will slow global growth and lift U.S. inflation.

The dollar rose against all its major counterparts and appears on track to test its year-date-high amid a mix of investor, model and option-related buying.

U.S.
consumers in October grew more confident about inflation easing, the solid job market and a lower risk of defaulting on their debt, a survey from the Federal Reserve Bank of New York showed.

With inflation close to the Federal Reserve's 2% target, policymakers are ready to respond if inflation pressures rise or the job market weakens, Richmond Fed President Thomas Barkin said on Tuesday.

Minneapolis Federal Reserve President Neel Kashkari said it looks like a strong economy will continue.

Federal Reserve Governor Christopher Waller said stablecoins are effectively “synthetic” dollars that can bring benefits to the financial system.

EUR/USD fell to its lowest level since November 2023 and option skews turned increasingly bearish amid U.S. tariff fears and political uncertainty in Germany.
The bloc's biggest economy will hold elections on Feb.
23.

More European Central Bank interest rate cuts are coming and the deposit rate could hit the so-called neutral level in the first half of next year, Finnish central bank chief Olli Rehn said on Tuesday.

The policies that Trump will implement once in office will likely put upward pressure on inflation on both sides of the Atlantic, European Central Bank policymaker Robert Holzmann said on Tuesday.

Sterling lagged its peers after data showed British wage growth, excluding bonuses, fell in the third quarter to its lowest level in more than two years.
Unemployment in September rose to 4.3%, from 4.1%.

Bank of England Chief Economist Huw Pill said labor market data released earlier on Tuesday showed inflation pressures in Britain remained too high for the BoE's 2% inflation target.

Treasury yields were up 8 to 12 basis points as the curve shifted upwards.
The 2s-10s curve was up about 3 basis points to +8.5bp.

The S&P 500 slipped 0.15% amid weakness in small caps.

Oil was little changed after OPEC cut its forecast for global oil demand this year and next.

Gold fell 0.8% to nearly a two-month low amid a stronger dollar and a broader market pivot after U.S. election results.
Bitcoin pared gains from its rally to record highs.

Copper fell 2.2% to a two-month low on worries about the economic impact of future U.S. policy on China.

Heading toward the close: EUR/USD -0.37%, USD/JPY +0.68%, GBP/USD -0.99%, AUD/USD -0.67%, DXY +0.43%, EUR/JPY +0.31%, GBP/JPY -0.31%, AUD/JPY +0.01%.

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