Dollar set to extend Trump rally, says Wall Street

Good morning. On today’s agenda:

• The assassination of a prominent Russian general

• Argentina emerges from recession

• How US groups are shaking up the European investment industry

• The future of fighter jets

But we start with the outlook for the dollar. Wall Street is betting the US currency, which has climbed 6.1 per cent since the start of October, will make further gains in a challenge to Donald Trump’s stated desire for a weaker currency.

More than half of all major banks surveyed by the Financial Times, including Goldman Sachs, Morgan Stanley and UBS, expect the dollar to rise further next year. Deutsche Bank said it could reach parity against the euro in 2025, having already strengthened from $1.11 at the start of October to less than $1.05.

Many fund managers are dismissive of Trump’s chances of being able to weaken the US currency as his pro-growth agenda, proposed tax cuts and plans for high tariffs are widely expected to stoke domestic inflation after he takes office next month. This could lead to the Federal Reserve keeping interest rates higher for longer, which in turn could attract more foreign capital into dollar assets. Read more on the incoming administration’s currency conundrum.

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Here’s what else we’re keeping tabs on today:

• US presidential election: Electoral college electors meet in their states to vote and confirm the results of the November 5 poll.

• Central banks: Brazil’s central bank publishes the minutes of its last interest rate-setting meeting when it accelerated the pace of rises amid a more challenging outlook for inflation.

• Companies: Drugmaker Pfizer, which has been under pressure from activist hedge fund Starboard Value, is expected to provide its 2025 profit forecast.

• Gaza talks: Israeli negotiators are holding talks with mediators in Doha, Qatar, over a ceasefire with Hamas and the release of hostages from Gaza.

• Germany: The opposition Christian Democratic Union will launch its election manifesto today ahead of the February 23 poll. Chancellor Olaf Scholz yesterday lost a confidence vote, paving the way for the dissolution of parliament ahead of the general election.

Five more top stories

1. A top Russian general accused of using chemical weapons in the invasion of Ukraine has been assassinated at the entrance to his home in Moscow by a bomb placed on a scooter. Lieutenant General Igor Kirillov was the head of Russia’s nuclear, chemical and biological defence forces. A source close to Ukraine’s security service confirmed to the Financial Times that the SBU was behind the killing.

2. Argentina’s economy emerged from a severe recession in the third quarter of 2024 in a milestone for libertarian President Javier Milei in his bid to end the country’s long-running crisis. The economy expanded 3.9 per cent from July to September in seasonal-adjusted terms compared with the previous quarter, marking Argentina’s first quarter of growth since it entered recession in late 2023.

3. Japan’s SoftBank yesterday unveiled plans to invest $100bn and create 100,000 jobs in the US, in the latest sign of how companies are rushing to ingratiate themselves with Donald Trump. The new investment will be used to create AI-linked jobs and infrastructure projects, including those focused on chips and data centres, a person familiar with the matter said. Read more on Masayoshi Son’s $100bn pledge.

4. Canada’s finance minister Chrystia Freeland resigned yesterday, creating fresh turmoil for Prime Minister Justin Trudeau and his minority government as they struggle to reverse their waning popularity. Freeland said Trudeau had sought to move her to a different cabinet position, adding that she and the Liberal leader had been “at odds about the best path forward” for the country. Here’s more on the resignation.

5. Precision Neuroscience, a company developing a device for controlling smartphones and computers through thought, has raised $102mn as it competes with rivals to build the novel technology. The field is dominated by Elon Musk’s Neuralink, which has raised more than $600mn, and Synchron, another so-called brain-computer interface company. Read more on how BCI devices work.

Today’s big read

Over the past decade, assets under management by US groups in the UK and Europe have more than doubled, from $2.1tn in 2014 to $4.5tn as of the end of September, according to ISS Market Intelligence. Very large US groups are building ever larger beachheads on the continent — gathering assets, squeezing fees and shaking up the market.

We’re also reading . . . 

• US politics: Elon Musk and other super-wealthy entrepreneurs stand to benefit from deregulation but will blue-collar workers, as Donald Trump promised, asks Edward Luce.

• Middle East: Recep Tayyip Erdoğan has a good claim to be one of two strongman leaders that are reshaping the region. The other? His hated rival Benjamin Netanyahu.

• ‘Libel warfare’: The ABC News network’s $15mn defamation payout to Trump has set a dangerous precedent for media freedom, say legal experts and executives.

Graphic of the day

Does the military still need expensive piloted fighter jets? The debate is gripping the defence industry and comes at a time when budgets are pressured and increasingly sophisticated drones are deployed to devastating effect in Ukraine and elsewhere. It also comes as western governments consider expensive plans for the next generation of fighter aircraft to replace current models. 

Take a break from the news

Could a bespoke duvet transform your sleep? From handmade varieties with anti-microbial fibres and sustainable down, to customised dual-fill duvets for partners with different sleeping temperatures, HTSI’s Inès Cross searches for the ultimate bedding perfect for every sleeper.