Dollar Strength Weighs on Pound, Euro, Yen

9 Jan 2025 , 10:08 AM

Underpinned by rising Treasury yields, the U.S. dollar surged higher on Thursday, pushing the yen, pound, and euro closer to multi-month lows as the prospect of tariffs changed.

The policies of U.S. President-elect Donald Trump, who returns to the White House on January 20, have been the main focus of markets in 2025. Analysts anticipate that Trump’s policies will both support growth and increase pricing pressure.

Bond yields have increased due to the growing prospect of tariffs; on Wednesday, the benchmark 10-year U.S. Treasury note yield reached 4.73%, the highest level since April 25. In Asian time, it was 4.6769%.

The dollar is still strong and has a significant impact on the currency market as a result of the bond market selloff.

As investors continue to worry that tariff concerns could cause the single currency to drop to the crucial $1 threshold this year, the euro dropped to $1.03095, staying near the two-year low it reached last week.

As British government bond yields reached multi-year highs on Wednesday, the pound fell to its lowest level since April and was barely moved at $1.2353 in early Asian trading.

Due to worries about inflation and the intentions of the Trump administration, the Federal Reserve shocked investors this month by predicting two rate cuts for 2025 instead of the four it had previously projected.

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