US dollar charges to 14-year top on Trump bets, but pullback in the cards

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The Year of the Rooster 2017 dollar bill in honour of the Chinese Lunar New Year is introduced at the Bureau of Engraving and Printing in Washington, DC. Photo: AFP

Published: 1:05am, 17 Nov 2016

The dollar climbed to a near 14-year high against a basket of currencies on Wednesday, even

as analysts cautioned the greenback is vulnerable to a letdown from its surge tied to bets on pro-growth policies under US President-elect Donald Trump.

The euro deteriorated to its weakest level in almost a year against the greenback. Trump’s stunning victory on November 8 has raised concerns about a rising tide of potentially destabilising wins for populist candidates and issues on ballots across Europe in the coming year.

“The market has gone a bit too far ahead of itself. It looks vulnerable for a short-term pullback,” said Mazen Issa, senior currency strategist at TD Securities in New York.

Weaker-than-forecast data on US producer prices and industrial production on Wednesday pinned Treasury yields near their 10-month peaks and put a cap on the dollar.

People walk past a board displaying the exchange rate for Mexican peso against the US dollar and the euro in a Bank in Mexico City, Mexico. Photo: Reuters

The dollar index reached 100.57, which was its highest since April 2003 before retreating to 100.46, up 0.2 per cent on the day. It has risen 3.5 per cent over eight days, which would be the biggest such increase since May 2015.