have gotten used to Bitcoin, the first digital currency, reaching new highs
over recent months. So, the fact that Bitcoin
reached a new fresh record at $64,374 on April 14 may not seem so sensational
any more, even with a heartbreaking upside movement by 5.5% in a single day on
This may be
another reason why the perception around
digital currencies seems to be changing.
Dollar index (DXY) June futures slid under the lowest levels since March 18,
reaching as deep as 91.65 points mark today. The soft landing of the Greenback
continues step by step almost every day during the last two weeks. That
intermediary result is in no way, of course, summarizing a long discussion on
the ability of higher Treasury's yields to make the Dollar more attractive in
principle. But it may leave the whole conception in serious doubt, at least.
Treasury Secretary of the United States Janet Yellen called governments around
the world to set up a minimum corporate tax rate at 21%. The idea was swiftly
supported by the International Monetary Fund (IMF). The U.S. believes that this
unified tax rate will act as a general wheel for the global economy.
according to Yellen this minimum tax rate should prevent cross-border capital
flight, domiciliation by corporates to low-tax jurisdictions.
Dollar index (DXY) gained another high at 93.2 points, a maximum not seen since
November 2020. The rally of the Greenback may have several reasons to continue,
but it may be suspended after the release of the NonFarm Payrolls report this
accelerating vaccination in the United States and expectations about a new $3
trillion stimulus bill promised by Joe Biden may support the optimism over
rising business activity in the country, as well as inflation expectations, which
may push up Treasuries yields. The 10-year Treasuries yield jumped to 14-month
highs at 1.
Today's market sentiment is being appetite for risk. Europe is rising on Tuesday as investors appear to have ignored fears about the Archegos hedge fund and despite rising bond yields.
The dollar continued under strong demand in Asia, driven by rising bond yields and expectations that the US economic recovery may lead the Federal Reserve to restrict monetary policy earlier than anticipated.
Treasury yields added to Monday's gains in the Asian session, with investors focused on the end-of-week employment report, which may underscore the robustness of the US economy as vaccination accelerates.
The U.S. Dollar is unlikely to have a big cause for a noticeable strengthening across the whole of the spectrum of the world's major currencies, since unordinary spikes in 10-year Treasury bond yields up to the annual level of 1.75% have calmed down for a while to reach 1.6% during the Asian trading hours today. This happened despite the Federal Reserve's inaction and against growing inflation expectations. Nevertheless, some of the Greenback's competing currencies have found their own reasons to decline.
The U.S. Federal Reserve (Fed) has jumped into the digital currencies race to create its own CBDC (Central Bank Digital Currency). “We have an obligation to be on the cutting edge of understanding the technological challenges, as well as the potential costs and benefits, of issuing a [central bank digital currency]," Fed Chair Jerome Powell said.
However, Mr. Powell said that there is no need to rush with the launch of a new currency: “we’re the world’s principal reserve currency, we don't need to rush this project, and we don't need to be first to market.
The large increase in fiscal and monetary stimulus that has been observed in this crisis has raised concerns about the risk of inflation. In essence, the argument focuses on the fact that if the money supply increases faster than its actual production then (ceteris paribus), inflation will occur. That is, if a central bank prints currency, at the outset households will also have more money available, which will perhaps make them spend more on consumption. Despite an increase in the money in circulation - the amount of goods does not change - therefore leading to an increase in prices.
market sentiment is aversion to risk. News that Germany has extended
containment measures for another month is hurting Europe on Tuesday.
remained stable in Asia after increased risk-taking prompted a fall in Treasury
yields, countering fears about the rise in Covid-19 cases and new lockdowns in
the higher-maturity Treasurys continued to fall in Asia after recording the
biggest decline in weeks on Monday. However, many investors predict that bond
yields will continue to rise as the U.S. economy recovers.
As the U.S. inflation data indicated as much as 2.8% of growth in the producer price index (PPI) last Friday, which is the highest value since November 2018, some part of the market seem to be mystified by the possible backlash by the Federal Reserve (Fed) at its latest regular meeting. The results of Fed's own monetary policy's audit will be represented to the market at 18.00 GMT, and the press conference with the U.S. regulator's Chairman Jerome Powell will follow half an hour later.
This possible increase in inflation could be due to the intense work of the U.S.