HIGHER YIELDS COULD STRENGTHENING THE US DOLLAR

08.02.2021
Market News

The US Dollar, which has experienced a sharp decline since last year, opens in 2021 with little hope of a recovery this year. Either economically, the Covid-19 pandemic situation or political stability may allow the US Dollar to strengthen again this year.

Entering February 2021, some of the published economic data will certainly give us an initial overview of the economic potential of the United States. Among those that stole the spotlight was that the 10-year earnings of the U.S. Treasury (Returns on 10-year Treasuries) increased to 1.20% this year.

This increase is contributed by the proactive measures taken by the White House government to stimulate the economy aggressively since last year. Bonds were sold out, causing the government's share price to rise sharply, leading to an increase in the value of the US Dollar.

Last week, the latest Non-Farm Payroll data released for January 2021 was a little disappointing when it was reported that only 49,000 total jobs were created, lower than expected. U.S. President Joe Biden and Treasury Secretary Janet Yellen stressed the importance of the U.S. government continuing to inject economic stimulus to meet the challenges of 2021.

In terms of the pandemic situation in the U.S., the positive decline in the Covid-19 infection gave investors some confidence in a stronger economic recovery this year. The United States was one of the first countries to start the Covid-19 vaccination program and this decline in infection was the result of the vaccination program.

AHMAD FAIZUDDIN BIN RAZALI
ANALYST OF CDG GLOBAL