US Dollar Weak as US Treasury Yields Dip, Risk Appetite Returns - Forex News by FX Leaders
US Dollar Drifts Lower as US Treasury Yields Weaken, Risk Appetite Returns

US Dollar Weak as US Treasury Yields Dip, Risk Appetite Returns

Posted Wednesday, March 3, 2021 by
Arslan Butt • 1 min read

Early on Wednesday, the US dollar is exhibiting signs of recovery after some weakness, following a decline in US Treasury yields which have also improved the risk appetite in global markets and further dented the safe haven appeal of the reserve currency. At the time of writing, the US dollar index DXY is trading around 90.79.

The past few weeks have seen considerable volatility in global markets over fears that various stimulus measures would stoke reflation, causing a jump in government bond yields around the world. The heightened uncertainty surrounding high inflation as global economies begin to recover from the pandemic-inflicted damage had caused stock markets to reverse their rallies and even hit commodity prices.

Meanwhile, the US is gearing up for another round of fiscal stimulus with President Biden’s proposed $1.9 trillion worth of pandemic relief inching closer to its rollout. The possibility of more stimulus is exerting additional downward pressure on the US dollar, turning it bearish against its major peers.

Later this week, expect more volatility in markets on the release of the latest NFP report. Markets will look for cues about the state of the US economy and its recovery, which could boost investor confidence and cause another round of sell-off in bonds.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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