The dollar index, which measures the currency's value against six major currencies, rose by 0.1% to 92.469, its highest since late November, after the US dollar started the trading week strong and stabilized on Tuesday morning. The dollar index, which measures the currency's value against six major currencies, rose by 0.1% to 92.469. Investors are now interested in the extent to which the greenback will continue to rise.
So, what are the reasons behind the rise in the US dollar?
1- High US bond yields
One of the biggest reasons behind the rise in the US dollar is the rise in the US Treasury bond yields, specifically the 10-year bonds, which supports the increase in demand for US assets, and thus the rise of the currency. 10-year bond yields rose by about 4 points to 1.60%, adding further pressure on technology stocks.
2- The performance of the US economy has improved
Recently, the US economy had a noticeable improvement in its performance, which was shown through improved economic data, the latest of which was the US Jobs Report issued last Friday. The economy succeeded in adding 379k jobs during the month of October, "the largest pace of job growth since October", while unemployment decreased from 6.3% to 6.2%. If the performance of the US economy continues to improve, the demand for the US dollar is likely to increase in the coming period.
3- Improved global economic prospects
Risk appetite in the global markets has slowly improved during the past period, with many countries moving forward with the coronavirus vaccine distribution. On the other hand, demand for safe havens has declined, particularly gold which fell to its lowest level since June 2020 at $1670 an ounce.
The dollar rose to 109.23 Japanese yen, its highest level for nine months, while the EURUSD lingered at 1.1850, the lowest levels since late November.
So, what are the reasons behind the rise in the US dollar?
1- High US bond yields
One of the biggest reasons behind the rise in the US dollar is the rise in the US Treasury bond yields, specifically the 10-year bonds, which supports the increase in demand for US assets, and thus the rise of the currency. 10-year bond yields rose by about 4 points to 1.60%, adding further pressure on technology stocks.
2- The performance of the US economy has improved
Recently, the US economy had a noticeable improvement in its performance, which was shown through improved economic data, the latest of which was the US Jobs Report issued last Friday. The economy succeeded in adding 379k jobs during the month of October, "the largest pace of job growth since October", while unemployment decreased from 6.3% to 6.2%. If the performance of the US economy continues to improve, the demand for the US dollar is likely to increase in the coming period.
3- Improved global economic prospects
Risk appetite in the global markets has slowly improved during the past period, with many countries moving forward with the coronavirus vaccine distribution. On the other hand, demand for safe havens has declined, particularly gold which fell to its lowest level since June 2020 at $1670 an ounce.
The dollar rose to 109.23 Japanese yen, its highest level for nine months, while the EURUSD lingered at 1.1850, the lowest levels since late November.
