Dollar edges higher on rate uncertainty, tariff threats

The dollar pushed higher again on Monday in what is shaping up to be a critical week for the prospect of U.S. rate cuts while drawing verbal support from U.S. President-elect Donald Trump.

In a surprise change of tone, Trump demanded that BRICS member countries commit to not creating a new currency or supporting another currency that could replace the dollar or face 100% tariffs.

That marked a shift from his prior advocacy of a weaker dollar to fight trade wars, and the Chinese yuan quickly slipped to a three-month trough at 7.2662 pre-dollar, while the Indian rupee hit record lows.

Political uncertainty in France added to pressure on the euro which slipped 0.4% to $1.0532 , after bouncing 1.5% last week and away from a one-year trough of $1.0425.

That saw the dollar index edge up to 106.170 , having closed out November with a gain of 1.8% even after a setback last week.

"Given the continued resilience of the U.S. economy and a worsening outlook elsewhere, we don't think this is the start of a deeper setback for the dollar," said Jonas Goltermann, deputy chief markets economist at Capital Economics.

Reuters