U.S. dollar to remain hawkish: Polls
US dollar will remain dominant for the time being as long as the Federal Reserve maintains its hawkish stance on interest rate hikes and its plans to unwind some of its pandemic-related bond purchases.
The dollar index, which gained nearly 7% against major currencies last year, has continued its stellar performance this year, rising another 4% so far, with nearly half of those gains occurring in March alone.
Much of that strength was driven by comments from Federal Reserve officials, who, in addition to calling for 50-basis-point rate hikes, are openly discussing aggressively shrinking the size of the Fed’s nearly $9 trillion balance sheet.
This has driven U.S. Treasury yields to multi-year highs and investors into dollar-denominated assets, a key component of the strong dollar trade that is unlikely to fade anytime soon, keeping the currency well-bid.
According to data released on Friday by the US Commodity Futures Trading Commission, market speculators’ net long bets on the dollar reached an 11-week high in the most recent week.
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