The U.S. dollar hit its highest level in a week against a basket of major currencies on Wednesday on expectations that Donald Trump would sound a pro-growth message in his first news conference as U.S. president-elect.
The latest rise in the dollar index, which measures the greenback against a basket of six major currencies, brought its gains since the Nov. 8 U.S. election to 5 percent. The index, which hit a 14-year high of 103.820 on Jan. 3, hit a session high of 102.950 on Wednesday.
Investors have been betting Trump will boost public spending and spur repatriation of overseas funds by U.S. companies, policies expected to bring higher inflation and induce the Federal Reserve to raise interest rates at a steady pace.
Trump, who takes office on Jan. 20, is scheduled to speak in New York at 11:00 a.m. ET.
“The hope is for a pivot back toward the Trumponomics agenda, which was three key themes: tax reform, deregulation, and infrastructure spending,” said Vassili Serebriakov, a currency strategist at Credit Agricole in New York.
Analysts said traders also used the general optimism surrounding the news conference as a reason to buy back the dollar after recent weakness, including a more than 1 percent drop in the dollar index on Jan. 5.
The euro fell about 0.9 percent against the dollar to a one-week low of $1.0455 EUR=. The dollar rose about 0.9 percent against the yen JPY= to a session high of 116.85 yen after falling against the Japanese currency for the past two days.
The dollar hit a one-week high against the Swiss franc of 1.0248 francs CHF=. Sterling hit a three-month low of $1.2038 GBP=D4.
The Mexican peso MXN=D2 weakened to an all-time low of 21.955 to the dollar as traders expect Trump to clarify whether he will stand by his campaign pledges to break with trade agreements with Mexico.
Analysts said the dollar could weaken if the Republican president-elect suggests he is worried about a strong U.S. currency or strikes an overtly protectionist stance.
“The wild card here is if Trump sounds a protectionist, anti-immigration, anti-strong dollar tone,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. “And if we get that, there is substantial risk for the dollar.”