The dollar held tightly to its 13 ½ year highs during Monday’s Asian session as investors held their beliefs that Trump would make good on his expansionary fiscal policies which will bring about interest rate hike to help stem inflation. The next Federal Reserve policy meeting is scheduled for December 13-14, at which time most analysts believe a rate hike will be implemented.
The dollar hit 111.190 yen during Monday’s Asian session, a high not reached since early June. The euro retreated slightly from Friday’s 11 month low to hit $1.0569, while the Chinese yuan continued its losing streak with a 12th consecutive day of losses, settling at 6.8985 per dollar, a near 8 ½ year low, before Monday’s opening bell.
U.S. Treasury yields reflected their largest two-week gains in more than five years after investors rushed to dump U.S. government debt following Trump’s presidential victory. Benchmark U.S. 10-year Treasury notes hit 2.342 during Monday’s Asian session. Some investors expect this trend to continue until Trump takes office and his policies and plans become more concrete.
Global markets will face a quiet week ahead, with Tokyo markets closed for a public holiday on Wednesday and U.S. markets closed at the end of the week for Thanksgiving.
Spotlight on the French Election
French voters voted on Sunday to exclude ex-president Nicolas Sarkozy from the race to be the conservatives’ nominee for the next presidential election. Sarkozy’s rival, Francois Fillon, earned the party’s top spot and will enter the primaries with a wide lead and an expectation to remain a serious candidate for president as the Left remains very divided and the French public remains concerned about electing a member of the far-right National Front to power. The French election is scheduled for May 2017.