Dollar Rises as Trump Warns BRICS, Treasuries Fall: Markets Wrap

(Bloomberg) — The dollar strengthened after US President-elect Donald Trump told BRICS nations not to create a currency to rival the greenback. Treasuries fell.

The US currency climbed against all its major peers after Trump said he would require commitments that the so-called BRICS would not move to create a new currency and repeated threats to levy a 100% tariff. Most Asian stocks rose, following gains on Wall Street Friday.

“Trump is using tariffs as a bargaining tool to achieve various economic policy objectives,” said Sonal Varma, chief economist for India and Asia ex-Japan at Nomura Holdings Inc. “The BRICS currency idea is still in the early stages, and member nations have various priorities at this stage. If implemented, the tariffs will also be negative for US consumers due to higher imported inflation.”

The euro and French bond futures slipped after far-right leader Marine Le Pen gave the strongest indication yet that she’s prepared to topple the government in Paris as soon as this week.

The prospect of quicker US inflation and trade tariffs once Donald Trump returns to the White House has boosted the dollar at the expense of other assets in recent weeks, reducing the likelihood of some central banks lowering interest rates as much as earlier envisioned.

“The idea that the BRICS Countries are trying to move away from the dollar while we stand by and watch is OVER,” Trump said in a post to his Truth Social network on Saturday.

“The outside external risk remains to be this Trump presidency being a very big uncertainty and obviously how that moves US yields, which is another big driver for EM,” said Ben Luk, a strategist at State Street Global Markets. “A lot of that is not really priced in for emerging markets yet.”

Treasuries slipped in Asian trade as markets digested hawkish comments from the Bank of Japan and traders looked ahead to US data that may help shape future Federal Reserve interest-rate policy.

Ueda said rate hikes are “nearing” as inflation and economic trends develop in line with the central bank’s forecasts. The yen surged more than 3% last week as bets on a December hike increased following data showing inflation in Tokyo accelerated.

China’s 10-year bond yield dropped to an historic low of 2% Monday, as traders ramped up wagers that the central bank would ease monetary policy further to bolster a weak economy.

The euro slid as much as 0.5% after French Finance Minister Antoine Armand said on Sunday the country won’t accept artificial budget deadlines from Marine Le Pen. The French far-right leader has told the prime minister he needs to make tweaks to his 2025 budget by Monday, which is when opposition lawmakers are expected to initiate the process to call the vote of no-confidence.

Oil rose along with Asian equities on signs of a slow recovery in China’s economy, as traders look to Thursday’s OPEC+ meeting for further direction. Gold fell as the dollar strengthened.

Key events this week: 

• Eurozone Eurozone Manufacturing PMI, unemployment, Monday
• UK S&P Global/CIPS UK Manufacturing PMI, Monday
• FT Global Banking Summit in London through Dec. 4, Tuesday;  BOE Governor Andrew Bailey will be a panelist
• China Caixin services PMI, Wednesday
• Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday
• ECB President Christine Lagarde appears before European Parliament committees, Wednesday
• Fed Chair Jerome Powell speaks, Wednesday
• OECD publishes economic outlook, Wednesday
• Eurozone retail sales, Thursday
• Germany factory orders, Thursday
• OPEC and non-OPEC ministerial meeting, Thursday
• India rate decision, Friday
• Eurozone GDP, Friday
• US unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 12:13 p.m. Tokyo time
• Nikkei 225 futures (OSE) rose 0.3%
• Japan’s Topix rose 0.7%
• Australia’s S&P/ASX 200 was little changed
• Hong Kong’s Hang Seng rose 0.3%
• The Shanghai Composite rose 0.8%
• Euro Stoxx 50 futures fell 0.6%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%
• The euro fell 0.5% to $1.0525
• The Japanese yen fell 0.6% to 150.60 per dollar
• The offshore yuan fell 0.3% to 7.2729 per dollar

Cryptocurrencies

• Bitcoin fell 0.3% to $97,535.21
• Ether rose 1.1% to $3,747.69

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.21%
• Japan’s 10-year yield advanced 2.5 basis points to 1.075%
• Australia’s 10-year yield declined one basis point to 4.33%

Commodities

• West Texas Intermediate crude rose 0.6% to $68.38 a barrel
• Spot gold fell 0.7% to $2,625.82 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess.

©2024 Bloomberg L.P.