Dollar Gains Strength on Rising Yields

30 Dec 2024 , 10:44 AM

With little year-end liquidity keeping most currencies in tight ranges, the Japanese yen fell to almost five-month lows against a dollar supported by increasing U.S. yields on Monday.

The possibility of Japanese intervention standing in the way of another test of the 160 level last saw in July, the yen was trading at 157.71.

At 107.98, the dollar index measure was unchanged from its main competitors.

At $1.0429, the euro was in a holding position during holiday trade and not far from previous lows. The currency will depreciate by about 5.5% against the dollar during the course of the calendar year.

The dollar has been aided by rising U.S. Treasury yields; last week, the benchmark 10-year note reached a high of more than seven months. On Monday, the yield was near that level at 4.625%.

The dollar index is up 2.3% for the month, making gains of 6.6% so far this year.

Expectations that President-elect Donald Trump’s policies of tax cuts, tariff hikes, stricter immigration, and looser regulation will be both pro-growth and inflationary and keep U.S. rates high have helped it rise in each of the last three months.

Since December 3, the dollar has increased by 10 yen. The Federal Reserve’s warning about potential rate cuts on December 18 was a major factor in the Japanese currency’s slide.

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