Investing.com – The US dollar rose on Wednesday, benefiting from rising bond yields after the release of healthy US economic data, while weak German business orders weighed on the euro.
At 04:35 ET (09:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.3% higher at 108.690.
Dollars grow as Treasury yields rise
The dollar has continued to push forward on Wednesday, continuing the positive tone of the previous session after data showed that the US rose in November, layoffs were low, while accelerating the activity of the services sector in December and hit a measure of prices paid high
This caused the 10-year Treasury yield to climb to an eight-month high, while the benchmark 30-year yield approached the 5% level.
“Yesterday's US data releases were hawkish for the Fed, and the probability of a rate cut in March has now fallen below 40%,” analysts at ING said in a note.
“The most striking print was the sub-component ISM prices paid, which rose to the highest level since January 2023. If a generally stable economy was already accounted for when the Fed met in December , an increase in inflation concerns could move even further. in the policy message.”
The Federal Reserve cut the number of rate cuts it sees this year to two at its December meeting, but traders are now pricing in only about 37 bps of a discount through the this year, according to LSEG data.
More data is due on Wednesday, in the form of the monthly and weekly economy, ahead of Friday's US release which is closely watched for further clarity on the health of the world's largest economy.
Germany's economic weakness depends on the euro
In Europe, it fell 0.2% to 1.0326, adding to the losses of around 0.5% overnight after the release of more disappointing economic data from the region's largest economy – Germany.
fell 5.4% in November, dampened by a decline in bulk orders, while the national figure fell 0.6%, dashing hopes for a boost from pre-Christmas promotions such as Black Friday and Cyber Monday.
Investors are currently looking for interest rates to be cut by around 100 basis points in the first half of 2025.
“There is only one speech by French central bank governor Villeroy to watch in today's eurozone calendar. EUR/USD may find reasonable support at 1.0300 for now,” ING said.
trading 0.2% lower to 1.2447, with little economic data due for release on Wednesday, and only a speech from Bank of England Deputy Governor Sam Woods to digest.
Interest rates were unchanged last month and are expected to proceed cautiously with further rate cuts this year with inflation still above target.
Yuan's mood is still weak
In Asia, it rose 0.1% to 7.3511, with the Chinese currency hitting its weakest in 17 years earlier this week.
Sentiment remains weak around China ahead of the inauguration of President-elect Donald Trump on January 20, with Trump promising to impose steep trade tariffs on China.
it gained 0.1% to 158.19, after recovering slightly from its weakest level in nearly six months.
The yen pared its recent losses after government officials verbally warned of possible currency market intervention, which saw traders take more caution in shorting Japanese currency.
