The dollar index .DXY, which tracks the greenback against a basket of six global peers, scooped 0.4 percent to 102.63, its biggest one-day advance since Dec. 15, as the prospect of higher U.S. interest rates kept sentiment bullish.
However, the dollar pulled back 0.1 percent to 117.33 yen JPY=D4 on Tuesday, after jumping almost 0.6 percent on Monday, its biggest one-day gain in more than two weeks.
“Following a period of consolidation between now and late January, we believe the USD will put on another 10 percent of gains over the next eighteen months,” said Richard Grace, chief currency strategist at Commonwealth Bank of Australia.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 global currencies, has gained 5.7 percent since the Nov. 8 election, largely on expectations for lower taxes, higher government spending and looser regulations under Trump. All these could goose growth and pose questions for the Federal Reserve.
The potential for stimulus comes with unemployment already at a post-recession low of 4.6 percent and inflation creeping closer to the Fed’s 2 percent target.
Even without fully factoring in Trump’s fiscal plans, central bank officials in December raised the number of rate hikes they foresee in 2017, from two to three, as they signaled greater confidence in the economy.
