The dollar has had its third session in a row, during which it strengthened. The reason is partly the closing of short positions on the US dollar, partly the growing tension before the planned meeting of the Federal Reserve System.
The dollar index, which measures the exchange rate of the US currency against a basket of six major world currencies, strengthened by 0.1 percent on Monday. The dollar was mainly supported by the declining volume of bets on its weakening, as many short positions were closed against it. Investors are also expected to expect an optimistic tone from the Fed’s meeting scheduled for this week regarding the development of the US economy.
Growing confidence in the dollar has also been boosted in recent days by rising ten-year government bond yields and, last but not least, uncertainty stemming from the planned meetings of the central banks of the United Kingdom and Japan. The Fed, the Bank of England and the Bank of Japan can set the direction in which interest rates in the world’s major economies will begin to take off in the coming weeks. Expectations of their growth are thus already reflected in the strengthening US dollar.
