A report reflected that the president-elect of the United States is considering using emergency measures to advance his policies.
He global dollar rose for the second consecutive session, as the yields of the US bonds continued their recent advance, following a report that the president-elect of the United States, Donald Trump, was contemplating the use of emergency measures to allow a new tariff program.
He dollar index — which measures the performance of the greenback relative to a basket of six other internationally relevant currencies — rose 0.28% to 109.00, after hitting a more than two-year high of 109.54 last week , while the euro fell 0.2% to $1.0318.
Meanwhile, the pound sterling weakened 0.87% to $1.2364 after falling to $1.2321, its lowest since April 22 and the second weakest of the year. In front of yen, The dollar strengthened 0.25% to 158.41 and approached the 160 level which caused the Japanese authorities to intervene to support the currency.
This occurs in advance of the key report of employment monthly Friday to be published by the US government. Markets are now pricing in just 39 basis points of easing by the Federal Reserve (Fed) this year, and the first interest rate cut is likely to come in June.
The measures that Trump analyzes favor the momentum of the dollar
The yield on the benchmark 10-year US Treasury bond hit 4.73%, its highest level since April 25, after CNN reported that Trump is considering declaring a national economic emergency to provide a legal basis for a series of universal tariffs on allies and adversaries.
Investors hope that Trump’s policies, such as deregulation and reduction of taxes, boost economic growth, but there are concerns that this, together with tariff actions yet to be confirmed, could cause a reacceleration of the inflation.
On Monday, the Washington Post said Trump was considering more nuanced tariffs, which he later denied. “This feeds into the whole strong dollar theme and even with the disappointing ADP (employments) data, the dollar is still firmer in the day,” he told Reuters Marc Chandler chief market strategist at Bannockburn Global Forex in New York.
“What this means is that people should not resist this, it is a genuine movement that has not run out yet,” he added.
Source: Ambito
