Dollar rises as Trump policies seen boosting U.S. inflation
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South Korean won, Chinese yuan and Japanese yen notes are seen on U.S. 100 dollar notes in this file photo illustration shot December 15, 2015. REUTERS/Kim Hong-Ji//Illustration/File Photo
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By Dion Rabouin
NEW YORK (Reuters) - The dollar climbed to a 3-1/2-month high against the yen on Thursday as markets weighed how President-elect Donald Trump's policies could affect economic growth.
The greenback rose more than 1 percent to 106.94 yen for the first time since late July
"It’s a continuation of the post-election response," said Ian Gordon, FX strategist at Bank of America Merrill Lynch. "For us, the clean sweep of both the White House and the Congress by the Republicans is a clear signal that we are going to get a pretty significant fiscal stimulus in 2017 and that is going to be bullish for (interest) rates."
Expectations that Trump's policies would boost spending and inflation helped U.S. long-dated Treasury yields rise to their highest in more than 10 months. Yields on benchmark 10-year notes and 30-year bonds had their largest one-day rise in years on Wednesday and added to gains on Thursday after a weak 30-year bond auction. [US/]
Higher interest rates for U.S. Treasuries raise the value of the dollar by making dollar-denominated assets more attractive to investors.
The Chinese yuan
The Mexican peso
Trump's election also bolstered the British pound, which rose to a one-month high against the dollar, as the president-elect's call for renegotiating trade deals set the United States and Britain in line to potentially join forces.
"You've got President-elect Trump in the U.S. along with Prime Minister (Theresa) May and they’re both talking about trade relationships," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange. "So you’ve got two relatively novice politicians that I think will rekindle the special relationship between the U.S. and the U.K."
The New Zealand dollar fell almost 1 percent
The euro fell to $1.0865, its lowest against the greenback since Oct. 25
(Reporting by Dion Rabouin; Editing by Andrea Ricci and James Dalgleish)
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