Throughout last week, the dollar depreciation posture beyond the ordinary, deviating from the economic fundamentals of the logic of the intention is clear, subjective deliberate devaluation tactics for the appreciation of prevention or economic protection significance is evident. Therefore the dollar depreciation for a week led to the appreciation of the main basket of currencies on the future economic recovery of these currencies to cause suppression or difficulties, the initiative is very obvious technical defensive or pavement highlighting. A week of the U.S. index meandering 91 points, other currencies generally rise passive or submissive very helpless.
First U.S. stocks and the U.S. dollar misallocation is conducive to long-term price synergy. On the one hand, it is logical that U.S. stocks rose, mainly listed companies’ earnings reports are relatively optimistic, yield and net profit exceed expectations make the stock index to promote favorable, the Dow on 34,000 points, the S&P on 4,100 points, the Nasdaq jumped on 14,000 points, which in turn makes the U.S. investment soaring significantly and a unique global sector. It is expected that the future repair of the U.S. stock market plunge is difficult to avoid, which is the inevitable rebound of the U.S. dollar, so the U.S. stocks in advance to prevent the appreciation of the subjective devaluation will stand out, which is a planned or strategic maneuver, but also to stimulate the major global basket of currencies important correlation factors and triggers. On the other hand, the U.S. economic fundamentals support the stock market rise, the positive investment consumption indicators are a guarantee for the rise of the stock index, and thus the Federal Reserve’s economic commentary or policy expectations have a slight sign of adjustment, which is also the inevitability of the formation of the dollar depreciation. Coupled with the decline in U.S. Treasury yields to 1.5%, this directly stimulates the dollar depreciation bias. But this is a synergistic reflection of the U.S. capital asset allocation.
The second U.S. economic structural pressure has not diminished in turn aggravated the depression of the dollar. On the one hand, the U.S. fiscal deficit reached a new high, with the fiscal deficit expected to reach $3.3 trillion in 2021, up 6.5% from the previous fiscal year and a record high. The U.S. Treasury Department expects the U.S. federal government fiscal deficit to rise to $1.7 trillion in the first half of fiscal year 2021, or October 2020 to March 2021, a record high for the same period. The U.S. fiscal deficit in the first half of this fiscal year is expected to be much higher than the $743.5 billion in the same period of the previous fiscal year, mainly due to the U.S. Congress since the outbreak of the epidemic through a series of economic relief measures to push up the deficit as the main cause and background. On the other hand, the U.S. capital flow data show that external support remains. Total overseas holdings of U.S. government debt fell to $7.1 trillion in February, down from a record high of $7.12 trillion in January. The total debt held by Japan and China respectively still exceeds the total debt held by the 3rd to 5th ranked UK, Ireland and Luxembourg. The U.S.’s 3rd largest overseas creditor, the United Kingdom, increased its holdings of U.S. debt by $20.8 billion to $459.5 billion in February from a year earlier. Ireland, ranked No. 4, increased its holdings by $2.4 billion to $316 billion from a year earlier. Luxembourg, in 5th place, increased its holdings by $700 million from a year earlier. Among the other top 10 overseas U.S. debt holders, Brazil and Belgium both reduced their holdings. This is the biggest reason or opinion guide for the depreciation of the dollar.
The third U.S. economy maintains the need to guard against a rebound in the dollar and suppress depreciation. At present, the U.S. economy is good unchanged, a week of retail data and consumer confidence index reflected beyond the ordinary, which has both the stimulating effect of U.S. fiscal and monetary policy, but also the investment effect of asset returns and the global economic recovery to support the role of the U.S. economy. After all, it goes without saying that the United States is the largest beneficiary of the global economy. Therefore the United States to protect the economic status and strength must stabilize the dollar trend and direction, devaluation-based national strategy must be escorted economic interests and needs. Therefore, the dollar devaluation initiative and prevention-oriented personality is very proper or prepared. Adding to the habit or doings of the U.S. economy focusing on the problem, the decline in the number of employment has also become the reason and element indicator of the dollar depreciation, after all, the expected number of 700,000, the actual number of only 450,000, the dollar borrowed the slope to depreciate the extreme play, to prevent the dollar rebound to leave sufficient room and space.
It is expected that the future dollar rebound is the focus, 92-93 points to fight for the focus, rebound inevitably prominent, devaluation reason is not enough when the important factors.