Dollar hoisted higher as U.S. yields rise on Trump bets
The dollar held near 13 1/2-year highs against a currency basket in Asian trading on Monday, as investors stuck with bets that President-elect Donald Trump's administration would adopt expansionary fiscal policies that will lead to higher interest rises.
The dollar index, which tracks the U.S. unit against a basket of six rivals, added 0.1 percent to 101.31, after adding more than 4 percent last week to mark its biggest weekly rise since March 2015. It notched a high of 101.48 on Friday, its highest since April 2003.
The dollar surged as yields on Treasuries of all maturities marked their largest two-week gains in more than five years as investors dumped U.S. government debt after the Nov. 8 U.S. presidential election.
"The market is buying the dollar and selling U.S. Treasuries, and it seems this trend may continue because we don't know the details of 'Trumponomics,' and we will not have it until after the 20th of January next year," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
"Until then, investors need to follow the trend," he said, adding, "We might see some correction ahead of Thanksgiving."
Yuan Falls to Eight-Year Low as Central Bank Cuts Reference Rate
The yuan dropped to its lowest level in more than eight years as the central bank weakened the reference rate.
The currency fell 0.09 percent to 6.8940 per dollar at 10:14 a.m. local time. A Bloomberg gauge of the greenback’s strength jumped the most since 2008 in the past two weeks amid speculation President-elect’s Donald Trump’s reflationary economic policies will trigger faster monetary tightening.
Betting against the yuan with 12-month non-deliverable forwards is one of Goldman Sachs Group Inc.’s favorite trades in 2017, the bank’s strategists wrote in a note last week. The Chinese currency will weaken to 7 against the greenback -- a level unseen since before the global financial crisis -- in the first half of next year, according to 14 of 16 analysts and traders surveyed by Bloomberg.
Oil Climbs as Iran, Iraq Signal Deal Hope Before Vienna Meeting
Oil extended gains as Iran signaled optimism OPEC will agree to a supply-cut deal and Iraq said it will offer new proposals to help bolster the group’s unity before members meet next week in Vienna.
Prices rose as much as 1.4 percent in New York, adding to its 5.3 percent gain last week. Iranian Oil Minister Bijan Namdar Zanganeh said it’s “highly probable” members will reach a consensus, according to comments published by the country’s Shana news service. Iraq will offer three new proposals for the output cut deal this week that are consistent with the group’s policies, The Wall Street Journal reported, citing Iraq Oil Minister Jabbar al-Luaibi.
West Texas Intermediate for December delivery, which expires Monday, rose as much as 66 cents to $46.35 a barrel on the New York Mercantile Exchange and was at $46.35 at 1:22 p.m. in Hong Kong.
Reference: Reuters, Bloomberg
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