US Dollar Dips as Markets React to Scott Bessent’s Treasury Nomination
The US dollar fell on Monday after a long run-up due to Trump nominating Scott Bessent for Treasury Secretary. The announcement helped soften fear over the direction of broad trade tariffs, causing yields on the Treasury to decline and reverse some of the dollar’s recent strength.
Dollar Weakens Amid Adjusted Trade Policy Expectations
The dollar index, which tracks the performance of the US currency against a basket of currencies, declined to 107.22 from 107.74 to trade at 0.6% below its two-year high of 108.09. The worst-performing currency was the USD, which shed 0.2% against the Japanese yen, while the euro strengthened 0.3% to $1.0452.
Public sentiment in the market for Bessent’s nomination was informed by his past statements supporting the phased reforms of trade tariffs. The market responded positively to this as it was regarded as a sign that the government may have moderated its aggressive policies, which caused immediate market shocks. Experts stated that lower expectations of tariffs could lower inflation rates, affecting the dollar rate edge.
However, it was observed that due to Bessent’s support for a strong greenback and fiscal consolidation, the greenback’s correction had been averted. Some market participants explained Thursday’s highs as an interim break in the green buck as technical analysis shows that it could be overbought.
Bond Market Sees Relief, Treasuries Rally
As investors adjusted positions for potential moderated fiscal policies, yields on 10-year treasury notes dropped to 4.343 % from Friday’s close of 4.412% . Bessent’s reputation as a fiscal conservative reassured bond markets that his leadership could help address concerns over a widening U.S. fiscal deficit.
The drop in Treasury yields came after weeks of speculation that they would rise by predatory degrees under the incoming administration. The nomination of Bessent, noted analysts, demonstrates that while markets had been preparing for ‘America First’ policies, there may be a more balanced approach to economic strategy.
Asian major trading partners reacted positively to the news in global markets. Hopes of waning trade tensions helped lift Japan’s Nikkei 225 index and South Korea’s Kospi, which closed up 1.3%. Meanwhile, European markets were stable, as the UK’s FTSE 100 gained 0.2 percent.
