Investing.com – The U.S. dollar rose on Wednesday, helped by rising bond yields following strong U.S. economic data, while weak German industrial orders weighed on the euro.
At 04:35 ET (0935 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.3% higher at 108.690.
Dollar rises as Treasury yields rise
The dollar continued to rise on Wednesday, following the positive tone of the previous session after data showed the US rose unexpectedly in November, layoffs were low, while service sector activity accelerated in December and a measure of prices paid for inputs. reached the two-year level. high.
That pushed the 10-year Treasury yield to an eight-month high, while the benchmark 30-year yield neared 5%.
“Yesterday’s US data was hawkish for the Fed and the implied probability of a March rate cut has now fallen below 40%,” ING analysts said in a note.
“The most notable result was the ISM’s price-to-pay subcomponent, which jumped to its highest level since January 2023. in a political message.”
The Federal Reserve cut the number of rate cuts this year to two at its December meeting, but traders are now pricing in only about 37 bps, according to LSEG data. easing this year.
There will be more data to digest on Wednesday in the form of monthly and weekly data ahead of Friday’s release of closely watched US data for more clarity on the health of the world’s largest economy.
Germany’s economic weakness weighs on euro
In Europe, the index fell 0.2% to 1.0326, adding to losses of about 0.5% overnight after more disappointing economic data from the region’s largest economy, Germany.
fell 5.4% in November, undermined by a decline in large orders, while the country fell 0.6%, dashing hopes of a rebound from pre-Christmas deals such as Black Friday and Cyber Monday.
Investors currently expect interest rates to fall by about 100 basis points in the first half of 2025.
“Today, the only thing worth watching on the eurozone calendar is the speech of the head of the French central bank, Villeroy. The EUR/USD pair may find decent support at 1.0300 for now,” ING said.
was trading 0.2% lower at 1.2447, with little economic data due on Wednesday, with only a speech from Bank of England deputy governor Sam Woods remaining.
Interest rates remained unchanged last month and are expected to be cautious about further rate cuts this year as inflation remains above target.
Yuan sentiment remains weak
In Asia, the index rose 0.1% to 7.3511, with the Chinese currency hitting its lowest level in 17 years earlier this week.
Sentiment around China remains weak ahead of President-elect Donald Trump’s inauguration on January 20, when Trump has vowed to impose high trade tariffs on China.
rose 0.1% to 158.19 after recovering marginally from its weakest level in nearly six months.
The yen reversed its recent losses after government officials verbally warned of possible intervention in the foreign exchange market, prompting traders to be more cautious about selling the Japanese currency.