US Dollar stands tall, hits 3-1/2 months high on firmer yields, growth prospect



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US Dollar stands tall, hits 3-1/2 months high on firmer yields, growth prospect

On Monday, the American Dollar Index (DXY) measured against a basket of six major currencies on an averaged seemingly had regained its safe-haven appeal amid a stubborn rise in US Treasury bond Yields as investors remained fretted that a stronger US economic growth alongside a rising inflation would more likely to send Treasury bond Yields even higher, eventually dampening optimisms over a flurry of high-flying US equity indices.

More importantly, the American currency, which went through a steeper-than-anticipated holocaust over fourth quarter of 2020, shrugging off as much as 4 per cent during the quarter, has bolstered more than 2.5 per cent year-to-date as FX traders across the globe have been expecting a broad-based upsurge in US Treasury bond Yields over the coming months that could counterweight sky-scrapping valuations of a slew of US stocks which were mostly driven by speculative bets while stemming a number of all-time closing highs over latest months.

Aside from a firmer US Treasury bond Yield, which rose to 1.594 per cent in the day, more than the benchmark S&P 500’s average turnover of an approximated 1.5 per cent in a year, strong US unemployment report released last week alongside Senate’s approval of President Biden’s $1.9 trillion in stimulus bill, added to further bullish wings for the American currency.

US Dollar scales higher as investors eye further rise in US Treasury bond yields

Citing statistics, in the day’s FX market round off, the US Dollar Index (DXY) measured against a basket of six major currencies on an average soared 0.53 per cent to 92.41, while safe-haven Japanese Yen shed 0.56 per cent to 108.85 yen per Dollar and Swiss Franc dropped 0.55 per cent to $0.9358 against its American peer.

Besides, the bloc’s common currency euro, shared among 19 euro zone member states, extended its four-day long losing streak and wrapped up the day 0.53 per cent lower against the greenback to $1.1845. Meanwhile, addressing to further upside momentums for US Dollar on the deck, a senior market analyst at OANDA in New York, Edward Moya said, “If we continue to see yields rise, that’s going to be very dollar positive and there’s nothing really getting in the way.