Investing.com – The US dollar fell slightly on Monday as US bond yields fell, but remained near recent highs as the end of the year approaches.
At 04:55 ET (09:55 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 107.690.
However, the index was still on track for a monthly gain of more than 2%, bringing this year’s gain to almost 7%.
Dollar on track for big annual gains
The dollar has been helped by rising US Treasury yields, with the 10-year benchmark hitting a more than seven-month high last week. However, this yield fell to 4.599% on Monday.
The election of Donald Trump as the new president also boosted the dollar, as his policies of looser regulations, tax cuts, tariff increases and tighter immigration are seen as both pro-growth and pro-inflation, and are likely to keep the Federal Reserve from cutting spending. interest rates next year soon.
The US central bank forecast only two 25 basis point rate cuts in 2025 at its final policy meeting of the year earlier this month, and markets are now pricing in an easing of around 35 basis points for 2025.
Trading margins are likely to be tight this holiday-influenced week, and the focus will be on Thursday’s weekly numbers and data a day later, as well as comments from an FOMC member.
The euro gains after Spanish inflation
In Europe, yields rose 0.1% to 1.0439, up slightly after data showed Spain’s annual EU-harmonized rate rose to 2.8% in December, up from 2.4% in November recorded.
The interest rate cut earlier this month was a signal that more cuts are in store as economic growth in the region stagnates.
However, the next rate cut could take longer after a recent rise in inflation, ECB Governing Council member Robert Holzmann said on Saturday.
accelerated to 2.2% in November, up from 2.0% a month earlier and above the ECB target of 2%.
traded 0.1% higher at 1.2595, with little UK economic data to study ahead of Thursday’s release.
This is expected to show that the country’s industrial sector continued to contract sharply in December after data showed the UK economy failed to grow in the third quarter.
Bank of England policymakers voted 6-3 in favor of keeping interest rates unchanged at their meeting earlier this month. This is a milder split than expected, suggesting interest rate cuts will continue next year.
The yen remains weak; risk of intervention
In Asia, trading was mostly flat at 157.76, around a five-month high for the pair, with only the risk of Japanese intervention preventing a retest of the 160 level last seen in July.
The ECB indicated it will take time to consider further rate hikes after the central bank kept rates stable at 0.25% at this month’s meeting.
rose 0.2% to 7.3136, holding near a one-year high as the prospect of more fiscal spending and looser monetary conditions in the coming year weighed on the currency.
