Dollar Dominance: Trump's Tariffs Shake Global Currencies

The U.S. dollar is gaining strength due to rising Treasury yields and potential tariffs under President-elect Donald Trump. The yen, euro, and sterling weaken as markets anticipate new economic policies. Bond yields soar, and Trump's unpredictable narrative creates challenges. The Federal Reserve's rate cut plans contribute to market volatility.

The U.S. dollar continued its ascent on Thursday, buoyed by surging Treasury yields that pressured the yen, sterling, and euro, driving them towards multi-month lows amid tariff uncertainties. Investors are keenly focused on President-elect Donald Trump's upcoming policies, expected to stimulate growth yet increase inflationary pressures.

Reports indicate Trump may declare a national economic emergency, providing grounds for broad tariffs. However, contradicting reports add to market unrest, pushing the yield on the 10-year U.S. Treasury note to 4.73%, the highest since late April. As a result, the bond market's selloff has further bolstered the dollar's standing in currency markets.

The dollar index hovers near a two-year high, reflecting changes in trader sentiment since the recent U.S. election. Upcoming Federal Reserve decisions on rates, along with non-farm payroll data, will be critical for future market movements, amid worries of potential economic slowdowns under new administration policies.

(With inputs from agencies.)