The US dollar is flat in the early morning hours on December 9. The US Dollar Index rose 0.86% on December 8 amid the ECB’s (European Central Bank) decision. The ECB decided to keep interest rates unchanged and expand quantitative easing until December 2017, but with a slight reduction in purchasing. The US Dollar Index closed higher last month. It rose to 13-year high price levels, but lost the momentum since the beginning of December. Although no strong fundamental factor supports the pull back, higher chances of an interest rate hike by the Fed in the near term keeps the dollar stronger.
Tax cut expectations along with hopes of economic stimulus with pro-growth Trump policies support the market sentiment. According to the U.S. Department of Labor, initial jobless claims fell by 10,000 to 258,000 in the last week. At 4:20 AM EST, the US Dollar Index was trading at 101.11—a rise of ~0.01%. The PowerShares DB US Dollar Bullish ETF (UUP) rose 0.89% to 26.13 on December 8. The rise in Treasury yields also supports the US dollar.
After gaining strength on December 8, Treasury yields are stable in the early hours on December 9. The yields on the US Treasury note rose sharply since the US presidential election. The yields rose until last week. They started consolidating this week. The US Treasury yield curve got steeper since the presidential election. The steeper Treasury yield curve shows the increase in inflation expectations and improved economic outlook.
At 4:30 AM EST on December 9:
The iShares 20+ Year Treasury Bond ETF (TLT) fell 1.2%, while the ProShares UltraPro Short 20+ Year Treasury ETF (TTT) and the ProShares UltraShort 20+ Year Treasury ETF (TBT) rose 3.6% and 2.2%, respectively, on December 8.