The US dollar rebounded early in the week from three-year lows, which it plunged in the week before. It owes, in particular, to expectations of economic growth, which should be brought by the government’s fiscal ballet, but also to increased government bond yields.
Democratic President-elect Joe Biden, who takes office on January 20, will also have majorities in both houses of Congress. Democrats will thus be able to playfully pass a fiscal package that has given the U.S. economy another significant boost to (not just) economic recovery.
Normally, such reports would heighten fears among investors about a possible spike in inflation and consequent damage to the economy. But the US dollar has literally been held down by rising interest rates on government bonds in past weeks. That, after all, was also reflected on the dollar’s rate, which began to strengthen.
But speculators moving in foreign exchange markets are in extraordinarily “bear mode,” the dollar nevertheless strengthened against the pound by 0.3 percent, according to Reuters. However, there was an adverse development of the pandemic situation on the British currency. Moreover, the British government has aviated that the next few weeks will be absolutely key to managing the contagion.