Dollar Rises Amid French Budget Woes – Asia Market Wrap

The dollar rose on Monday, amid losses in the euro and yen, as traders digested political worries in France and a rally in Treasury yields.

French bond futures fell as far-right leader Marine Le Pen gave the clearest hint yet that she is ready to destabilise the administration in Paris as soon as this week. Treasuries fell as traders anticipated US data that might affect Federal Reserve policy and digested hawkish remarks from the Bank of Japan.

The possibility of higher US inflation and trade conflicts under Donald Trump had bolstered the US currency in recent weeks, but the plethora of international events provided additional support for the greenback. After the US president-elect again threatened to impose a 100% tariff and warned BRICS countries not to develop a currency to compete with the US dollar, traders were once again reminded of Trump’s emphasis on his America-first goal.

A surge in tech stocks and indications of economic stabilisation in China helped Asian stocks rise. As traders increased their bets that policymakers would loosen monetary policy, China’s 10-year yield fell beyond the crucial psychological milestone of 2% and was at a record low.