Dollar drops from two-year high, yuan hits 16-month low

The U.S. dollar retreated on Monday from a two-year peak as traders took profits following the holiday period rally, ahead of crucial economic data this week.

Meanwhile, China’s yuan dropped to its lowest level in 16 months,News.Az reports, citing Reuters.

In Canada, Prime Minister Justin Trudeau is increasingly likely to announce he intends to step down, though he has not made a final decision, a source told Reuters.

Markets appear to have largely priced that in and might welcome an election to clarify matters, leaving the U.S. dollar down 0.36% against its Canadian counterpart to C$1.4395.

Currencies slid against the dollar in thin trading over the holiday period as investors focused on the likely strength of the U.S. economy in 2025 and President-elect Donald Trump's tariff policies.

The U.S. currency slipped on Monday, however, with the dollar index falling 0.48% to 108.44, down from a more-than-two-year high of 109.54 touched on Thursday.

U.S. government bond yields stayed relatively steady over the holiday period while those of Germany, the euro zone's benchmark, ticked higher.

The euro was last up 0.55% at $1.0368, taking it away from a 25-month low touched last week.

Meanwhile, sterling rose 0.52% to $1.2488 after falling to an eight-month low on Thursday.

Also in focus was the Chinese yuan, which on Friday weakened past the psychological level of 7.3 per dollar in the onshore market for the first time in 14 months, after the People's Bank of China (PBOC) had aggressively defended that key threshold for most of December.

The onshore yuan slid to a 16-month low of 7.3301 per dollar.

News.Az