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US dollar stands tall, hoisted by higher US yields on Trump bets
[TOKYO] The US dollar nudged up to a six-month high in early Asian trading on Monday, as investors continued to back bets that the administration of President-elect Donald Trump would embark on expansionary fiscal policies and boost growth.
The US dollar rose to 111.125 yen, its highest since May 31. It was last down 0.1 per cent at 110.82 as investors positioned ahead of US. Thanksgiving holiday later in the week.
"The market is buying the dollar and selling US Treasuries, and it seems this trend may continue because we don't know the details of 'Trumponomics,' and we will not have it until after the 20th of January next year," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
"Until then, investors need to follow the trend," he said, adding, "We might see some correction ahead of Thanksgiving."
Data from the Commodity Futures Trading Commission released on Friday showed that speculators trimmed their US dollar bets in the week through Nov 15, as profit taking reduced net long positions after they had risen seven straight weeks.
Japanese yen net longs, meanwhile, posted their lowest level since early June, the data showed, with the yen a casualty of the US dollar's strong rally.
Yields on Treasuries of all maturities have registered their largest two-week gains in more than five years as investors dumped US government debt after the Nov 8 US presidential election.
The yield on US benchmark 10-year Treasury notes rose to a one-year high of 2.364 per cent on Friday. It last stood at 2.344 per cent, compared to its US close of 2.337 per cent.
Also underpinning the greenback, most market participants expect the US Federal Reserve to raise interest rates at its Dec 13-14 policy meeting.
And expectations that a Trump presidency will usher in higher growth and lead to faster-than-expected Fed hikes have helped power the US dollar to 13-1/2-year highs against a basket of currencies.
The US dollar index, which tracks the US unit against a basket of six rivals, added 0.1 per cent to 101.34, after adding more than 4 per cent last week to mark its biggest weekly rise since March 2015. It notched a high of 101.48 on Friday, its highest since March 2003.
On Thursday, Fed Chair Janet Yellen told a congressional panel that a rate increase was likely "relatively soon". James Bullard, a voting member of the US central bank's rate-setting committee, said last week that the Fed will raise US interest rates in December barring a major shock, such as global market volatility or bad US jobs data.
The euro inched up 0.1 per cent to US$1.0598 but remained not far above Friday's 11-month low of US$1.0569.