The U.S. dollar remained steady, hovering near one-year highs as investors navigated uncertainties surrounding former President Donald Trump’s economic agenda and the Federal Reserve’s forthcoming policy decisions.
This cautious sentiment contributed to an uptick in short-term U.S. yields.
The benchmark 10-year yield also held steady at around 4.4%, providing additional support for the dollar as market participants speculated on the Federal Reserve’s next move.
Market participants are now pricing in a nearly 50% probability that the Fed will maintain rates in December, a significant shift from prior expectations of a rate cut. A decision to hold rates would further strengthen the dollar’s appeal.
Meanwhile, Trump’s cabinet appointments are under close scrutiny, as investors seek clues regarding the administration’s economic direction, particularly with respect to inflationary policies that could curtail further rate cuts. The lack of clarity surrounding trade tariffs has also kept markets in a “wait-and-see” mode.
Looking forward, attention now turns to upcoming Federal Reserve comments and key economic data, including jobless claims and housing market indicators. Strong economic data, combined with geopolitical tensions and rising treasury yields, suggest that the dollar’s rally may persist in the near term.
