BUZZ-COMMENT-US recap: Dollar rises for second day on haven pivot

Reuters
01-09

Jan 8 (Reuters) - The dollar index rose for a second day on Wednesday as tariff concerns, rising global bond yields and solid U.S. data boosted investor appetite for the greenback.

The dollar received a jolt after a CNN report said President-elect Donald Trump was contemplating the use of emergency measures to allow for a new tariff program.

In U.S. data, ADP and weekly jobless claims were mixed, suggesting the labor market is slowly cooling. Minutes of Fed’s December meeting largely confirmed the central banks’ stance of slowly easing policy rates as inflation lingers. Focus turns to the US. jobs report on Friday. Federal Reserve Governor Christopher Waller said inflation should continue falling in 2025 and allow the U.S. Federal Reserve to further reduce interest rates.

Sterling tumbled for a second day as a 26-year high in U.K. government 30-year yields sparked concerns about future borrowing. Option risk reversals widened, anticipating further pound losses. EUR/USD fell as divergent economies, U.S. tariff threats and bearish techs fueled talk of parity this year. ECB policymaker Francois Villeroy said ECB interest rates should reach the point where they are no longer a drag on growth by this summer if inflation is tamed by then. His comments followed data showing eurozone sentiment sagging in December and soft German industrial orders.

The Canadian dollar was pressured after the earlier report on U.S. tariffs, with options seeing a rise in put demand.

The yen fell versus the greenback for a third day though gained against other G10 peers as haven currencies outperformed. BOJ regional reports and overtime data are eyed for Thursday. Treasury yields were mixed as the curve steepened. The 2s-10s curve was up more than 1 basis point at +40.8bp.

The S&P 500 was little changed in a mixed market. Oil prices fell over 1%, impacted by the stronger dollar and a build in U.S. fuel inventories last week.

Gold edged up 0.1% while copper rose 1.8% as funds scooped up the industrial metal. Heading toward the close: EUR/USD -0.29%, USD/JPY +0.26%, GBP/USD -0.99%, AUD/USD -0.3%, DXY +0.49%, EUR/JPY -0.02%, GBP/JPY -0.65%, AUD/JPY -0.05%.

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(Editing by Burton Frierson Reporting by Robert Fullem)

((mailto:robert.fullem@thomsonreuters.com;))

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