investingLive Americas FX information wrap 8 Dec USD rises as merchants anticipate hawish Fed minimize

U.S. Treasury yields moved higher across the curve during the US session, reinforcing demand for the dollar and helping to lift the USD broadly against its major counterparts.

Although the Federal Reserve is widely expected to cut rates, market sentiment has shifted toward the idea of a hawkish cut — one in which policymakers lower rates but pair the move with firmer guidance on inflation risks and a cautious path for future easing.The rise in yields, combined with the hawkish-leaning policy outlook, boosted the greenback.

Below is a snapshot look of the change of the USD vs the major currencies today:

• EUR, +0.03%
• JPY +0.37%
• GBP +0.05%
• CHF, +0.30%
• CAD, +0.30%
• AUD, +0.23%
• NZD unchanged.

Looking at the US yield curve today, despite a successful 3 year note auction, the yields did move higher across the curve but they are near the middle of the low and high trading range for the day.

Kevin Hassett — the current White House economic adviser and frontrunner to become the next chair of the Federal Reserve — told CNBC that the Fed should continue to “get the rate down some,” stressing the need to watch incoming data carefully because many pieces are still missing. investingLive He praised the current chair for “herding the cats,” but argued real-wage growth and positive supply shocks are the way to restore living standards and anchor long-term growth. Against that backdrop, he suggested there is plenty of room for the 10-year Treasury yield to drop, hinting at possible market support if rates are cut.

In other economic news out of the NY Fed, the New York Fed’s November consumer survey showed that inflation expectations remained stable across all horizons, with the one-year outlook holding at 3.2% and both the three- and five-year measures steady at 3%. Home-price expectations were also unchanged at 3%. Despite that stability, households grew more pessimistic about their current and future financial situations, and expectations for medical-cost inflation surged to the highest level since January 2014. At the same time, labor-market sentiment improved modestly, suggesting consumers see job conditions as a relative bright spot even as broader financial concerns persist.

In other news, a powerful magnitude 7.6 earthquake struck off northern Japan, triggering tsunami warnings and raising concerns about potential infrastructure damage and economic disruption. The shock created a bout of risk aversion in financial markets, which led to selling pressure on the Japanese yen as investors reassessed exposure to Japan and moved capital into safer or higher-yielding assets. That yen weakness helped push USD/JPY higher, and the pair broke above the 200-hour moving average at 155.628, a key technical level that shifts short-term momentum firmly in favor of the dollar. Holding above this moving average keeps the bullish bias intact, with the quake-related uncertainty reinforcing the market’s willingness to sell JPY until conditions stabilize.