Dollar Steadies Amid Trump Inauguration, Yen Rises

The U.S. dollar has steadied amidst a backdrop of policy uncertainty ahead of Donald Trump's presidential inauguration, with a slight increase in the dollar index to 109.12. Despite recent cooling U.S. inflation data leading to a drop in bond yields, the yen has gained strength, reaching a one-month high as investors anticipate a potential Bank of Japan rate hike next week. Analysts suggest that the market has priced in an 80% chance of a 25-basis-point increase by the BOJ. Concerns regarding inflation have prompted cautious trading, with market participants closely watching Trump's policy announcements, particularly regarding tariffs. The nomination hearing for Trump's Treasury Department pick, Scott Bessent, is highlighted as a significant event that could influence market sentiment. Overall, while the dollar remains stable, uncertainties surrounding U.S. economic policies and their impact on inflation continue to loom large.