Dollar's Dance: Currency Shifts in a Tumultuous Market

The dollar held near a two-year peak as traders anticipate U.S. economic data, particularly December's nonfarm payrolls report, to guide the Federal Reserve's rate decisions. Meanwhile, the Chinese yuan weakened beyond 7.3 per dollar, and Australian and New Zealand dollars slightly rose. Uncertainty surrounds Donald Trump's economic policies.

The U.S. dollar saw a marginal decline on Monday but remained close to its two-year peak, with traders closely watching upcoming U.S. economic indicators, notably December's nonfarm payrolls report, for guidance on the Federal Reserve's interest rate trajectory.

Significant weakening of the Chinese yuan occurred, breaching the 7.3 psychological level per dollar for the first time in over a year, a move that was largely anticipated by markets. Meanwhile, the Australian and New Zealand dollars experienced slight gains, suggesting limited impact from the yuan's dip.

Beyond these currency fluctuations, uncertainty looms over President-elect Donald Trump's potential economic policies, including proposed import tariffs and tax revisions, which are adding to market hesitancy. Investors remain cautious but predict further strength for the dollar given the current economic climate.

(With inputs from agencies.)