The U.S. dollar strengthened on Thursday, driven by rising Treasury yields and concerns about potential Trump tariffs. The pound and euro weakened, while the yen gained ground. The market awaits clarity on Trump's economic agenda and its potential impact on inflation and growth.
The U.S. dollar strengthened on Thursday, fueled by rising Treasury yields. This pressure impacted the pound and euro while the yen recovered slightly from recent lows. Market participants awaited clarity on potential Trump tariffs. The spotlight in 2025 is on President-elect Donald Trump's agenda, with analysts anticipating both growth-boosting and inflationary effects from his policies.
Concerns about Trump's tariff strategies, including possible national economic emergency declarations, have driven bond yields higher. The yield on the benchmark 10-year U.S. Treasury note reached 4.73% on Wednesday, its highest since April 25. Currency fluctuations were particularly noticeable in the pound, which weakened against the dollar, despite higher British government bond yields. Analysts attributed this unusual phenomenon to a combination of factors, including declining confidence in Britain's fiscal outlook, record-low approval ratings for the new Labour government, and depressed business and consumer sentiment. The euro also weakened, but less drastically than the pound. Investors remain apprehensive about the euro's potential decline to parity with the dollar due to tariff uncertainties. The yen, however, gained strength against the dollar, supported by Japan's falling real wages. The dollar index, which tracks the U.S. dollar against six major currencies, rose 0.13% at 109.16, nearing its two-year high. Market focus will now shift to Friday's payrolls report, which will provide insights into the Federal Reserve's future interest rate decisions
U.S. Dollar Treasury Yields Trump Tariffs Pound Sterling Euro Yen Federal Reserve Inflation Economic Growth
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