Demand for the dollar is usually high as it is the world's reserve currency. Other factors that influence whether or not the dollar rises in value in comparison to another currency include inflation rates, trade deficits, and political stability.
The dollar has been gaining strength against the currencies of other major economies. The dollar is strong because the US economy is healthier than those of many other countries and because the Federal Reserve keeps raising interest rates.
Does the dollar get stronger with higher interest rates?
But the overriding reason for the strong dollar is the fight against inflation. The Federal Reserve is ratcheting up interest rates to attack the current near-constant rise in prices and said last week it expects more hikes this year. As it continues to raise rates, the dollar will strengthen.
<-- https:// tradingeconomics.com/ united-states/ interest-rate --->
How do bond yields affect the dollar?
Bond yields actually serve as an excellent indicator of the strength of a nation's stock market, which increases the demand for the nation's currency. For example, U.S. bond yields gauge the performance of the U.S. stock market, thereby reflecting the demand for the U.S. dollar.
<--- https:// ycharts.com/indicators/ 10_2_year_treasury_yield_spread --->
The dollar has been gaining strength against the currencies of other major economies. The dollar is strong because the US economy is healthier than those of many other countries and because the Federal Reserve keeps raising interest rates.
Does the dollar get stronger with higher interest rates?
But the overriding reason for the strong dollar is the fight against inflation. The Federal Reserve is ratcheting up interest rates to attack the current near-constant rise in prices and said last week it expects more hikes this year. As it continues to raise rates, the dollar will strengthen.
<-- https:// tradingeconomics.com/ united-states/ interest-rate --->
How do bond yields affect the dollar?
Bond yields actually serve as an excellent indicator of the strength of a nation's stock market, which increases the demand for the nation's currency. For example, U.S. bond yields gauge the performance of the U.S. stock market, thereby reflecting the demand for the U.S. dollar.
<--- https:// ycharts.com/indicators/ 10_2_year_treasury_yield_spread --->