US Dollar Strengthens as Positive Data Supports Hopes For Economic Recovery
Arslan Butt • 1 min read
Early on Thursday, the US dollar continues to trade strong, holding on to its recent gains over the release of encouraging economic data from the US raising hopes for a faster economic recovery in the wake of the ongoing coronavirus crisis. At the time of writing, the US dollar index DXY is trading around 90.86.
The second round of financial aid which included stimulus checks helped spur retail sales across the US even as industrial output and PPI also gave markets a positive surprise during the previous session. While retail sales surged to 5.3% MoM during January, beating the forecast for a 1.1% rise instead, industrial production across the US rose for the fourth consecutive month – by 0.9%, and PPI was up by 1.2% during the same period.
The US dollar is also enjoying support from positive developments towards the implementation of President Biden’s proposed $1.9 trillion stimulus package. The additional stimulus measures, along with the rapid rollout of the COVID-19 vaccines across the country and a reduction in fresh coronavirus cases, have increased expectations among traders that the US is poised to post a faster economic recovery than several other parts of the world.
However, analysts continue to maintain a period of weakness for the US dollar through 2021, mainly driven by Fed’s insistence of extending its dovish stance. In its latest meeting minutes released on Wednesday, the central bank once again stated its plans to keep its monetary policy loose until the economy rebounds to pre-pandemic levels.