In recent weeks, the valuation of the US dollar has been affected by the global circumstances of the pandemic. On the one hand, what most economic analysts expected was to see a weak and sluggish dollar at the beginning of the year. But against all odds, the currency has remained strong and expectations high. Meanwhile, Treasuries saw an increase in March to 1.77%, and although the figure fell back to 1.56% on Friday, it remains above last year’s 0.90%.
For PineBridge Investments, the trajectory of the US currency is positive, and they expect this to continue. It should be noted that the US is currently leading the way in the vaccination campaign and the Biden administration is still pumping millions of dollars of stimulus into the US economy.
On the other side of the coin, firms such as JP Morgan Asset believe that the trend will not remain upward as other countries, especially in Europe, catch up with vaccination and start to recover. Already last week we started to see a rebound in the euro with a 3% rise above the 1.20 barrier in the Eurodollar.
Other entities such as T. Rowe or Aberdeen Standard Investments share JP Morgan’s view of the dollar trend as they see possibilities in other currencies but not with the dollar growth. Even Goldman Sachs Group Inc. dared to point out in a statement that “the dollar is substantially overvalued” and added that “beyond the short term, we continue to see a structurally negative outlook for the US currency”.
It remains to be seen what the future holds for the US dollar, whether it will continue its uptrend, or whether it will go the opposite direction and fall. In any case, traders should keep a close eye on Monday’s Core Durable Goods Orders m/m, which is expected to be slightly higher than last month.
Also, today, the Ifo Business Climate Index is scheduled to be released in Germany, a figure that will reflect, from the point of view of German companies, the current economic situation, and forecasts for the next six months.