Dollar weakens as yields fall
The U.S. dollar weakened slightly on Monday, as U.S. Treasury yields fell, but remained near recent highs ahead of the end of the year.
At 4:55 a.m. ET (09:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 107.690.
However, the index is still on track for a monthly gain of more than 2%, bringing its year-to-date gain to nearly 7%.
Dollar on track for big annual gain
The dollar has been helped by rising U.S. Treasury yields, with the benchmark 10-year note hitting a more than seven-month high last week. However, the yield fell to 4.599% on Monday.
The election of Donald Trump as the new president has also given the dollar a boost as his policies of loose regulation, tax cuts, tariff hikes and tighter immigration are seen as pro-growth and inflationary, and are likely to keep the Federal Reserve from cutting interest rates quickly next year.
The U.S. central bank projected just two 25-bp rate cuts in 2025 at its final policy meeting of the year earlier this month, and markets are now pricing in just about 35 basis points of easing for 2025.
Trading ranges are likely to be tight this holiday-affected week, with focus on Thursday’s weekly unemployment figures and the ISM manufacturing PMI data a day later, as well as comments from FOMC member Thomas Barkin.
Source: Investing.com
