Categories: Base Metals / General Market Commentary / Precious Metals
Topics: General Base Metals / General Market Commentary / General Precious Metals

Dollar charges to 14-year high, bond tantrum in full swing

Dollar charges to 14-year high, bond tantrum in full swing

The dollar climbed to its highest level in almost 14 years against a basket of currencies on Friday, while U.S. bond yields were set for their biggest fortnightly rise in 13 years on bets U.S. inflation and interest rates are headed higher.

A growing perception that the economic policies of U.S. President-elect Donald Trump will push up consumer prices helped put the dollar on track for its biggest two-week rise against Japan's yen in almost 30 years.

European shares nudged down .GDAX .FTSE .CAC and U.S. stock futures ESc1 pointed to a flat open for Wall Street.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.4 percent to hover just above four-month lows touched earlier in the week. It logged its fourth straight week of losses.

The dollar's rise against the yen JPY= raised hopes of an earnings boost to Japanese exporters, helping lift the Nikkei average .N225 to a 10-month high. The blue-chip Japanese stock index closed 0.6 percent higher.

Data on Thursday suggesting the U.S. jobs market is tightening and inflation is gaining traction have bolstered a view that U.S. growth and inflation could accelerate if the Trump administration cuts taxes and increases fiscal spending.

Last week's unexpected U.S. election result has prompted investors to ditch their once rock-solid conviction that growth in developed economies will remain tepid because of tough competition from emerging market economies with lower wages.

That has led to a repricing of assets, most notably in currency and bond markets.

"What we're looking at is a broad shift of investment back to the U.S.," said Richard Cochinos, Citi's head of G10 currency strategy in London.

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