The US dollar rose to a four-month high against six major currencies on Tuesday, while bitcoin continued its record gains as investors continued to enter trades seen to benefit from Donald Trump's incoming administration.
The euro was at a seven-month low and the yuan fell to its lowest level in more than three months, with Europe and China both potential targets of Trump's tariffs.
Gautam Chhugani, analyst at research firm Bernstein. "We expect a crypto-friendly regulatory environment under Trump, starting with a pro-crypto Securities and Exchange Commission (SEC)."
The US dollar index, which measures the currency's value against six major trading partners, rose 0.38% to 105.83, near its highest level since early July.
"Markets continue to drive US equities, US interest rates, and the US dollar up," said Alvin Tan, head of FX Asia strategy at RBC Capital Markets.
"Today's impetus may come from reports that Trump intends to appoint Senator Rubio as well as Congressman Waltz as top foreign policy officials, who are known to be tough on China."
The latest sources that Trump is expected to choose US Senator Marco Rubio as secretary of state, arguably the most decisive choice on the short list. Republican Representative Mike Waltz, a critic of China, is expected to become national security adviser, sources said.
The Australian dollar – which tends to be weighed down by the economic outlook of China, Australia's main trading partner, slipped 0.45% to $0.6545.
The euro fell to $1.0611 on Tuesday, its lowest level since late April, and was last down 0.34% at $1.0619.
Trump's Republican Party will control both houses of Congress when he takes office in January, Decision Desk HQ projected on Monday. This will allow him to implement his agenda of reducing taxes and shrinking the federal government.
Trump warned that the European bloc would "pay a high price" for not buying enough exports from America, with cars a particular target. He also threatened China with a comprehensive tariff of 60%.
Tariffs that could potentially add to inflation and immigration policy have caused markets to cut the probability of a quarter-point interest rate cut by the Federal Reserve on Dec. 18 to 69% from nearly 80% a week ago, according to CME Group's FedWatch Tool.
Europe also faces additional pressure from political uncertainty in Germany, the bloc's largest economy. Germany is expected to hold new elections on February 23, eleven weeks after the collapse of Chancellor Olaf Scholz's ruling coalition.
The pound sterling eased 0.36% to $1.2824 after data showed UK wage growth was slowing and unemployment rising, with the pound also hit by a rising dollar.
The US Dollar strengthened 0.23% to 154.04 yen. The Japanese currency fell to a three-month low of 154.715 yen per dollar last week.
