US Dollar Regains Strength as Economic Outlook Improves

The US dollar appears to have regained some of its strength as it climbs to the highest level seen in four months against safe haven JPY

Arslan Butt•Wednesday, February 17, 2021•1 min read

US Dollar Regains Strength as Economic Outlook Improves

Early on Wednesday, the US dollar appears to have regained some of its strength as it climbs to the highest level seen in four months against safe haven Japanese yen, on the back of renewed hopes for economic recovery and a rise in US Treasury yields. At the time of writing, the US dollar index DXY is trading around 90.79.

The dollar index picked up after touching the lowest level seen in three weeks during the previous session. The strength in the reserve currency was driven by the 10-year US Treasury yields improving from around 1.2% to over 1.3%, as markets turned hopeful about US economy’s recovery and an improvement in inflation.

Boosting the US dollar was the release of the New York Fed’s Empire State manufacturing index, which rose to a seven month high for February. The business conditions index rose by 8.6 points since the previous month to touch 12.1 during the month of February, beating economists’ forecast for a reading of 5.9.

Rising expectations for an improvement in economic conditions across the US have dented the appeal of its major peers, with the Euro sliding slightly lower while the GBP holds steady. Even the AUD and the Chinese yuan have dipped against the US dollar after optimistic comments from Fed officials on inflation picking up later this year.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.