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© Reuters The dollar rises, passing its highest level in 5 weeks. What is the reason?
Arabictrader.com – The US dollar posted strong gains during trading on Tuesday, hitting its highest level since December 13 last year, supported by rising yields and market optimism about the strength of the US economy.
Looking at today’s forex trading, we note that the American rate (which measures the green currency’s performance against a basket of six other major currencies) rose by 0.40% to a record high of around 103.77 points.
The main reasons for the rise of the US dollar in today’s trading
Several factors helped reinforce the upward momentum of dollar movements in the foreign exchange market. The most important of these factors can be explained below:
First: The rise in US Treasury yields
The sharp rise in US Treasury yields of various maturities led to a significant increase in demand for the dollar in trading, as the yield on the 10-year US Treasury rose by 1.45% to 4.156% and that on the 20-year US Treasury yields rose 1.45% to 4.156% The yield rose about 1.66% to a record 4.512%, while the 30-year U.S. Treasury yield rose about 1.79% to 4.393%.
Second, markets are increasingly optimistic about the strength of the United States economy
The US dollar received strong support from the statements made yesterday, Monday, by the director of the National Economic Council at the White House, Lael Brainard, in which she explained that the various economic data showed the diversification of the structure of the US economy and supply chains and its positive impact on productivity and therefore economic growth in the United States. This fueled market optimism about the strength of economic activity in the country, which in turn had a positive impact on the dollar’s performance in foreign exchange market trading today.
In addition to the above factorsIt can be said that the dollar is still influenced by investors’ expectations that the US Federal Reserve will keep interest rates at high levels during the next two meetings. The Federal Interest Rate Tracking Tool released by CME Group found that there is a 97% and 59% probability that the Federal Reserve will leave the key interest rate unchanged at 5.50% during the January and March meetings, respectively, which would be noticeable Support provided the dollar’s moves during today’s trading. .
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