SYDNEY- The dollar relinquished a little of its recent gains on Monday as the pick for US Treasury secretary seemed to reassure the bond market and pulled yields lower, shaving some of the currency’s rate advantage.
Yields on 10-year Treasuries slipped to 4.351 percent, from 4.412 percent late Friday, as President-elect Donald Trump’s choice of fund manager Scott Bessent was welcomed by the bond market as an old Wall Street hand and a fiscal conservative.
However, Bessent has also been openly in favor of a strong dollar and has supported tariffs, suggesting any pullback in the currency might be fleeting.
“Bessent has publicly lauded dollar strength following news of Trump’s election win, so I admit to being somewhat perplexed by the suggestion that the weakening in the dollar is because of his appointment,” said Ray Attrill, head of FX research at NAB.
“He is an avowed fiscal hawk, so perhaps that has something to do with it, but seeing is going to be believing in this regard.”
The dollar was likely due some consolidation having risen for eight weeks in a row for only the third time this century and many technical indicators were flashing overbought.
The index was last down 0.5 percent at 106.950, having hit a two-year peak of 108.090 on Friday. The dollar dipped 0.4 percent on the Japanese yen to 154.11 and further away from its recent peak of 156.76.
The euro edged up 0.5 percent to $1.0478 and away from Friday’s two-year trough of $1.0332. Resistance is up at $1.0555 and $1.0610, with support around $1.0195 and the major $1.0000 level. The single currency had taken a hit on Friday as European manufacturing surveys (PMI) showed broad weakness, while the US surveys surprised on the high side.
