US Dollar at Highest level in 3-1/2 months Supported by the High US Bond Yields

On Monday, the US dollar reached its highest level in 3 and a half months, as higher US Treasury yields worried investors and boosted the appeal of the Dollar as a safe haven.

After falling 4% in the last quarter of 2020, the dollar has risen more than 2.5% since the beginning of 2021, as investors expect that higher US bond yields will put pressure on higher stock valuations, and increase demand for the US currency.

“If we keep seeing high yields, it will be very positive for the dollar, and there are really no hindrances to that,” said Edward Moya, senior market analyst at OANDA in New York.

While US bond yields increased by a large margin from a year-long peak of more than 1.62% reached on Friday, yields in Germany fell about 5 basis points last week, bringing the euro to near its lowest level in 4 months, below $ 1.19.

Today, US Trade Secretary Gina Raimondo rejected calls to weaken the dollar, saying that a strong dollar was “in America’s interest.”

The US Senate approved a $ 1.9 trillion bailout plan a day after a US jobs report raised the dollar to its highest level since November 2020.

By 16:30 GMT, the dollar index recorded 92.34 points against a basket of 6 major currencies, up 0.49%, its highest level since November 24.

The Australian dollar fell 0.13% to $ 0.7670, while the New Zealand dollar fell 0.29%.

The US dollar settled near its highest level in a month against the British pound at $ 1.3819, at a time when it jumped against the Japanese currency to 108.85 yen, its highest level in 9 months.


  • Reuters