Dollar Rose on Report China Could Allow Weaker Yuan – Europe Market Wrap

The dollar rose on reports that Chinese leaders are considering letting their currency fall as they prepare for higher tariffs under a second Donald Trump administration.

The suggestion that Beijing could allow the yuan to weaken startled markets, which were in a pause ahead of Wednesday’s US inflation data release and next week’s Federal Reserve meeting. It brought the offshore yuan down as much as 0.5%, while the dollar index rose 0.3% to a two-week high.

The move spread overseas, causing declines in China proxies, including as the Australian and New Zealand dollars. Futures for the S&P 500 and Nasdaq 100 indices rose slightly, while Europe’s Stoxx 600 benchmark recovered from an early loss.

Some BoJ officials are not against a rate hike in December if proposed. BoJ is said to see little cost to waiting for the next rate hike. That led to the yen strengthening before quickly paring some of its strength.