(Bloomberg) -- The dollar climbed on Friday, extending a weekly advance fueled by Donald Trump’s return to the White House and sending major currency peers tumbling.
The Bloomberg Dollar Spot Index jumped as much as 0.8% on the last trading day of the week, pressuring the Norwegian krone, Swedish krona and Australian and New Zealand dollars lower by at least 1%. The euro also slumped as much as 1.1% to $1.0687 before paring the move.
Going into the election, traders had been positioned for the dollar’s strength, according to the latest Commodity Futures Trading Commission data.
Hedge funds, asset managers and other speculators held some $17.6 billion in bullish dollar positions in the week ended Nov. 5 — before the election results were known, CFTC data show.
The dollar then surged as the results of the US presidential race became clear in the early hours of Wednesday as traders anticipated Trump policies that would boost inflation and growth. The prospect of Trump’s promised tariffs also supported the US currency.
On a weekly basis, Bloomberg’s dollar gauge is up 0.3%, set for a sixth-straight week of gains — the longest since June.
On Friday, the dollar’s advance gained momentum after the Financial Times, citing people familiar with the discussions, reported that Robert Lighthizer had been asked to be US Trade Representative under Trump’s new administration. An official announcement had yet to be made.
“It’s confirmation of Trump’s platform, and shows he’ll aggressively pursue the trade policies he talked about during his campaign,” said Helen Given, a foreign-exchange trader at Monex. This is “giving the dollar a bit of a boost.”
Lighthizer, who served as the US Trade Representative during Trump’s first term in office, was the chief architect of the Republican’s protectionist trade policies.
To Valentin Marinov, head of G-10 FX research at Credit Agricole CIB in London, Lighthizer’s reputation “as a staunch protectionist precedes him.”
“This is a timely reminder that tariffs will feature quite prominently in the early stages of Trump’s second presidency,” he said.
(Updates with positioning data starting from third paragraph)
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