The US dollar is gaining ground on the other major currencies – 15.03.2021
The US dollar is gaining ground on the other major currencies as the foreign exchange market reacts to rising Treasury yields. The prospect of inflation continues to dominate investors’ minds, as all the conditions appear to be in place for a massive rebound in economic activity that is likely to cause consumer prices to spike. Rising yields make it more expensive for those who bet against the greenback to maintain their positions, due to the higher swap costs, forcing the abandonment of short positions in a dynamic that is conducive to further gains for the American currency.
Ricardo Evangelista – Senior Analyst, ActivTrades
European benchmarks opened flat on Monday ahead of another busy week and after a difficult trading session in Asia. Reflation worries have resurged with traders already pricing the effect of rising prices from central banks’ monetary policies. It is interesting to note how last week’s bullish leverages (stimulus, vaccination rollout) have become today’s bearish drivers as they raise the prospect of a more hawkish tone from central banks. All eyes are on long-term borrowing costs this week with investors keenly following data and semantics from the Fed on Wednesday, the BoE on Thursday as well as the BOJ’s monetary policy decision from Haruhiko Kuroda on Friday. Even if most investors are already anticipating a “back-to-normal”’ situation with rising rates, the pace of any hawkish monetary policies are still uncertain and could significantly increase market volatility this week.
Pierre Veyret– Technical analyst, ActivTrades
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.