Financial Markets in Turmoil: Dollar Stable, Bitcoin Reaches New Heights

The international financial landscape is experiencing exciting times as the US dollar hovers near a three-week high against major competitors. Market participants anticipate an interest rate cut by the Federal Reserve this week, followed by a cautious outlook for 2025. Meanwhile, Bitcoin experienced a historic surge, surpassing the $105,000 mark. This is due to reports that Donald Trump, the designated President of the USA, is adhering to a strategic Bitcoin reserve plan. This news is greatly energizing the cryptocurrency markets. Meanwhile, the yen is struggling with recovery attempts after a weak week. Reports suggest that the Bank of Japan may decide against an interest rate hike on Thursday. The British pound is also under pressure following unexpected economic data released last week. US Treasury yields are rising, giving the dollar additional tailwind. Traders are expecting a quarter-point reduction in Fed rates on Wednesday but now anticipate no further action in January. With inflation above the Fed's 2% target, the path to price stability remains challenging to navigate. With Trump's upcoming inauguration, inflation could gain additional momentum, potentially forcing the Fed under chairman Jerome Powell into action. The US dollar index has held steady at 106.86, after rising to 107.18 on Friday for the first time since late November. Exchange rates against the yen and euro showed slight positive movements. Sterling gained nearly 0.18% and was able to slightly recover from initial losses, while the euro noted a modest increase. Noteworthy is the jump of Bitcoin, which climbed to a record high of $106,533 with an impressive 3.6% increase. The announcement of a possible Bitcoin reserve by the United States could revolutionize the crypto markets in the long term.