The US dollar (USD) is up this morning against some of its key competitors, including a 0.1327% increase to the Japanese yen (JPY).

A growing economy that is showing signs of good health is helping boost the dollar against more stagnant economies around the world. The dollar is also up against the Euro by 0.050%. It is slightly down against the Canadian dollar (CAD), however, by 0.049%.

These minor changes show how closely the economies are matching one another in some key areas, like GDP and inflation. The US government is working to keep inflation in check by not cutting interest rates early in the year. The UK and the Canadian banks are doing much the same for now, trying to bring inflation down after record highs in 2022 and 2023.

Canadian employment data will be released on Friday afternoon, and as a result, the US dollar is trading sideways in this pairing. The US released its own jobs report earlier in the month that showed better than expected numbers and helped the dollar against most major instrument pairings.

Can the US Dollar Hold Its Own?

USD had a rough 2023, but it was a vast improvement over the previous year. Economists expect 2024 to be even better as the economy improves and inflation will likely drop. From Friday morning, the US Dollar Index was up 2.8% for the year so far. This index measures how the dollar compares to the Swiss franc, Canadian dollar, British pound, the euro, Japanese yen, and Swedish krona. Those rising numbers bode well for USD.

Treasury yields grew 4%, which gives the dollar another hand up. Most economic indicators are showing in the dollar’s favor. What can hurt it on the international markets is economic gains from other countries that make their instruments stronger than the dollar. While the dollar will likely continue to improve, it may struggle against competing currencies as international economies improve as well.