US Dollar weakens on Bessent nomination, bond yields
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The US Dollar (USD) began the week on a weaker footing, pressured by a bearish gap in the USD Index and declining Treasury bond yields. Investors reacted to the announcement of fund manager Scott Bessent as the next US Treasury Secretary, viewing the pick as a stabilizing move. As a result, the USD Index fell 0.55%, trading around 106.90 during Monday's early European session, while the 10-year US Treasury yield dropped below 4.35%.
Market reacts positively to Bessent’s appointment
The appointment of Scott Bessent has been widely interpreted as a "safe hands" choice. Analysts, including Stephen Spratt of Societe Generale, highlighted the market's relief that a potentially more unconventional candidate was avoided. Bessent’s conservative stance on fiscal policy and emphasis on restraining US borrowing contributed to a decline in Treasury yields, exerting downward pressure on the USD.
The announcement has also buoyed US equity markets, with futures on major stock indices rising between 0.4% and 0.6%, reflecting improved risk sentiment. This shift has further reduced the safe-haven appeal of the Dollar, amplifying its losses against major counterparts.
Currency performance highlights
The Euro (EUR) emerged as the biggest beneficiary of USD weakness, with EUR/USD rising decisively above 1.0500. Sterling (GBP) followed suit, with GBP/USD climbing 0.5% to trade near 1.2600. Both currencies capitalized on the softer Dollar and positive domestic sentiment. The Japanese Yen (JPY), however, struggled to gain traction as a safe-haven asset, limiting USD/JPY’s losses to 0.3% as the pair hovered around 154.30.
The table below illustrates the USD's daily percentage changes against major currencies:
Base/Quote EUR GBP JPY CAD AUD NZD CHF USD -0.61% -0.53% 0.22% -0.10% -0.26% -0.06% -0.11%
The heat map shows USD weakness was most pronounced against the Euro, while the Japanese Yen and Swiss Franc registered relatively minor changes due to their muted safe-haven demand.
Implications for other markets
Gold prices (XAU/USD) also felt the impact of the risk-on sentiment. After gaining nearly 2% last week, gold retreated sharply, trading below $2,670 and losing 1.8% on the day. The improved market mood has reduced demand for non-yielding assets, despite lower US bond yields providing some support for the metal.
USD/JPY saw limited downside as the Yen struggled to capitalize on safe-haven flows, trading near 154.30. The pair remains constrained by mixed sentiment, with Japanese political uncertainty and BoJ policy speculation limiting gains for the Yen.
Focus ahead
Traders will monitor key economic data releases and central bank commentary for additional catalysts. From Europe, the IFO business sentiment survey in Germany could influence EUR/USD, while UK speeches from BoE Deputy Governor Clare Lombardelli and MPC member Swati Dhingra may provide fresh direction for GBP/USD.
In the US, the Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index are expected to provide insights into economic momentum. Investors will also focus on the upcoming release of the Fed’s November meeting minutes and the US Personal Consumption Expenditure (PCE) Price Index, which could shape expectations for the Fed’s December rate decision.
Trading outlook
The USD’s soft start to the week suggests further downside risks if bond yields continue to decline and market optimism persists. EUR/USD appears poised to challenge higher levels above 1.0500, while GBP/USD could target 1.2650 if BoE commentary boosts sentiment. Conversely, USD/JPY is likely to remain range-bound, with 154.00 serving as key support and 155.00 as immediate resistance.
Gold traders should watch the $2,650 support level closely. A sustained break below this level could extend the correction, while a recovery above $2,700 might signal renewed buying interest amid global uncertainties.
Market reacts positively to Bessent’s appointment
The appointment of Scott Bessent has been widely interpreted as a "safe hands" choice. Analysts, including Stephen Spratt of Societe Generale, highlighted the market's relief that a potentially more unconventional candidate was avoided. Bessent’s conservative stance on fiscal policy and emphasis on restraining US borrowing contributed to a decline in Treasury yields, exerting downward pressure on the USD.
The announcement has also buoyed US equity markets, with futures on major stock indices rising between 0.4% and 0.6%, reflecting improved risk sentiment. This shift has further reduced the safe-haven appeal of the Dollar, amplifying its losses against major counterparts.
Currency performance highlights
The Euro (EUR) emerged as the biggest beneficiary of USD weakness, with EUR/USD rising decisively above 1.0500. Sterling (GBP) followed suit, with GBP/USD climbing 0.5% to trade near 1.2600. Both currencies capitalized on the softer Dollar and positive domestic sentiment. The Japanese Yen (JPY), however, struggled to gain traction as a safe-haven asset, limiting USD/JPY’s losses to 0.3% as the pair hovered around 154.30.
The table below illustrates the USD's daily percentage changes against major currencies:
Base/Quote EUR GBP JPY CAD AUD NZD CHF USD -0.61% -0.53% 0.22% -0.10% -0.26% -0.06% -0.11%
The heat map shows USD weakness was most pronounced against the Euro, while the Japanese Yen and Swiss Franc registered relatively minor changes due to their muted safe-haven demand.
Implications for other markets
Gold prices (XAU/USD) also felt the impact of the risk-on sentiment. After gaining nearly 2% last week, gold retreated sharply, trading below $2,670 and losing 1.8% on the day. The improved market mood has reduced demand for non-yielding assets, despite lower US bond yields providing some support for the metal.
USD/JPY saw limited downside as the Yen struggled to capitalize on safe-haven flows, trading near 154.30. The pair remains constrained by mixed sentiment, with Japanese political uncertainty and BoJ policy speculation limiting gains for the Yen.
Focus ahead
Traders will monitor key economic data releases and central bank commentary for additional catalysts. From Europe, the IFO business sentiment survey in Germany could influence EUR/USD, while UK speeches from BoE Deputy Governor Clare Lombardelli and MPC member Swati Dhingra may provide fresh direction for GBP/USD.
In the US, the Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index are expected to provide insights into economic momentum. Investors will also focus on the upcoming release of the Fed’s November meeting minutes and the US Personal Consumption Expenditure (PCE) Price Index, which could shape expectations for the Fed’s December rate decision.
Trading outlook
The USD’s soft start to the week suggests further downside risks if bond yields continue to decline and market optimism persists. EUR/USD appears poised to challenge higher levels above 1.0500, while GBP/USD could target 1.2650 if BoE commentary boosts sentiment. Conversely, USD/JPY is likely to remain range-bound, with 154.00 serving as key support and 155.00 as immediate resistance.
Gold traders should watch the $2,650 support level closely. A sustained break below this level could extend the correction, while a recovery above $2,700 might signal renewed buying interest amid global uncertainties.