Dollar Dips and Yields Slip After Trump’s Treasury Secretary Nominee

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The dollar lost some of its recent gains on Monday as investors anticipated that the appointment of Scott Bessent as U.S. Treasury Secretary would calm the bond market, leading to a drop in yields and reducing the dollar's interest rate advantage. Yields on 10-year Treasuries fell to 4.351% from 4.412% on Friday, as Bessent, a fund manager known for his fiscal conservatism, was seen as a stabilizing choice.

While Bessent has supported a strong dollar and tariffs, suggesting any dollar decline might be temporary, some analysts were puzzled by the currency’s weakness following his appointment.

Ray Attrill, head of FX research at NAB, noted that Bessent has been a supporter of dollar strength, raising questions about the reason behind the dollar’s dip.

 The dollar had surged for eight consecutive weeks, reaching a two-year peak of 108.090, prompting some consolidation and technical indicators signaling that it might be overbought. The dollar index fell by 0.5% to 106.950, while the Japanese yen weakened by 0.4% to 154.18, distancing itself from its recent high of 156.76.

The euro gained 0.7% to $1.0496, moving away from its two-year low of $1.0332. Resistance levels are at $1.0555 and $1.0610, with support near $1.0195 and the significant $1.0000 mark.

The euro had been hit by weak European manufacturing surveys, while stronger U.S. data boosted the dollar, causing a widening gap between European and U.S. bond yields. Investors are now pricing in more aggressive easing from the European Central Bank, with a 59% chance of a half-point rate cut in December, while the likelihood of a Federal Reserve rate cut in the same month dropped to 52%.

In the UK, disappointing retail sales data fueled expectations of a rate cut from the Bank of England, likely in February, leading the pound to hit a six-week low of $1.2484 on Friday. By Monday, the pound had bounced back by 0.4% to $1.2591 but remained below last week’s high of $1.2714.

In the cryptocurrency market, Bitcoin fell 1.2% to $98,208 after profit-taking ahead of the $100,000 mark. The cryptocurrency has surged over 40% since the U.S. election on expectations that President Trump will relax regulations on digital currencies.

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.