Recent rebound characteristics of the dollar highlighted the dollar index rose 0.46%, although the index range maintained 90 points, but the meandering indicator appreciation of 91 points significantly, the amplitude expanded to 1.2%. Compared to the reasons and background of the dollar appreciation posture is mainly economic and investment side of the stimulus and drive.
The economic stimulus of the dollar appreciation is dominant. In particular, the latest U.S. service sector indicators run to 60 points of the state of affairs is clearer, the latest January indicators 58 points of the posture foreshadows the U.S. economy is robust, coupled with manufacturing indicators 56 points conducive to economic confidence, the U.S. index rebound basis to advance obviously. The ensuing weekend U.S. employment indicators are two-fold, but public opinion is more biased toward the bad side of the concern, and thus the weekend U.S. index from 91 points back to 90 points, but compared to the level of the beginning of the week U.S. index is still on the rise. The main difference is that: the level of U.S. unemployment rate fell significantly, from 6.7% in the previous month to 6.3% in January, which indicates that the effect of U.S. policies and bailouts to stabilize employment is significant, which in turn plays an auxiliary stabilizing role for retail or consumer stability. However, the consistent style of the U.S. is still characterized by a preference for negative comments, and the negligence of positive factors is the focus and emphasis of the depreciation of the dollar to play. In addition, the U.S. political and policy clarity is highlighted, Biden’s new president’s first foreign policy showcase to maximize U.S. interests is also a confidence factor to promote the dollar’s rise. On the one hand this speech highlights the U.S. credibility and international checks and balances policy position basically unchanged, but the principles and ways to respond is not clear, the tone of the U.S. strategic purposes remain unchanged is the basis and fundamental of U.S. interests. The basic principle of presidential variable and strategic unchanged is the benchmark of U.S. national interest and the keynote of future U.S. foreign policy, including the basic national policy of dollar devaluation is also in it.
U.S. dollar asset prices assist in supporting. Last week, U.S. stocks rose very significantly, the three major U.S. stock indexes rose by 3-6% respectively, especially the Nifty rose and record levels are more prominent. Compared behind is listed earnings yield remarkable, technology company shares rose, manufacturing rose, even aviation due to the impact of the epidemic or Boeing accident is not pessimistic, the initial phase of the U.S. stock bull market argument or more conducive to the U.S. stock market up expectations and confidence, which is an important supporting approach and synergistic indicators of the U.S. dollar does not rise instead of fall. Especially important is the U.S. 10-year and 30-year Treasury yields rise when the dollar has to appreciate necessarily, but this is a combination of U.S. policy and structure must be the approach and response. At one point over the weekend the US 10-year Treasury yield rose 2 basis points to around 1.16%, a level close to its high since March last year, while the US 10-year break-even inflation rate, a market indicator of expected inflation, reached 2.19%, its highest level since May 2018; after all, international oil prices have risen to $56-58, which suggests that inflation in the US and Europe is increasing and the economy is gradually recovering. This leads to the expectation that the US 30-year yield will rise to 2% this year from the current 1.94%, with correlations and co-integration indicators for changes in the US index when asset prices are cooperative.
Therefore, it is expected that the recent dollar appreciation is the focus, the rebound strength or limited, the dollar depreciation will not change, but the technical correction inevitability or will increase the range oscillation situation, rise depreciation uncertain state need to be prudent to determine.