The U.S. dollar fell from a recent high after President-elect Donald Trump nominated Scott Bessent, a fiscal conservative and Wall Street veteran, as Treasury Secretary. Investors welcomed the appointment, viewing Bessent as a stabilizing force for the bond market, which led to a decline in 10-year Treasury yields to 4.351% from Friday’s 4.412%. While Bessent has historically supported a strong dollar and tariffs, analysts suggest his fiscal discipline may temper further currency gains. The dollar index dipped 0.5% to 106.950 after touching a two-year high of 108.090 last week, signaling potential consolidation.
Currency markets also reflected contrasting economic policies and data from the U.S. and Europe. The euro rebounded 0.7% to $1.0496, recovering from a two-year low, as traders anticipated additional rate cuts from the European Central Bank (ECB) in response to weak manufacturing data. Meanwhile, U.S. economic surveys signaled strength, with markets lowering the likelihood of immediate Federal Reserve rate cuts. This divergence continued to benefit the dollar, though technical indicators suggest it may face short-term resistance.
Other markets responded to shifting global conditions, including disappointing UK retail data that pushed the pound to a six-week low before partial recovery. Bitcoin, which had surged over 40% since the U.S. election, declined 1.2% to $98,208 amid profit-taking as it approached the symbolic $100,000 mark. Overall, currency and crypto markets remain sensitive to evolving fiscal and monetary policy signals from major economies.
