After touching 102 on Friday, the dollar index (DXY) surged past 104, marking its first gain since November.
The US employment report was solid, and Fed head Jerome Powell cast doubt on a rate decrease in March, so that helped propel the news.
“The USD rebounded hard on the back of Friday’s US jobs data as US yields jumped significantly higher and the currency continued to build on those gains on Monday after Fed Chairman Powell’s ‘60 Minutes’ speech which further doused market expectations for a March rate cut,” analysts at Scotiabank said.
“Fed revaluing, plus USD-positive seasonal trends (through Q1), plus developing technical momentum (with the DXY testing the 50% retracement of its Q4 slide), point to gains prolonging a little more in the next few weeks, although the rebound in the DXY overestimates the improvement in yield differentials in the USD’s favor to some extent at the moment.”
There is no direct relationship between Bitcoin and the DXY index, which measures the strength or weakness of the USD relative to other currencies, mainly the euro.
Speculation about DXY based on a single data point may be too early, albeit it does sometimes correlate inversely.
After coming close to$80, WTI Oil has dropped back down to $71.67 once more. Futures were split 50/50 on a rate reduction in March before Powell’s speech, so it appeared premature. More importantly, rate decreases are based on inflation, not employment statistics.
Wages might be hit by a tight labor market, while prices for products could be heading in the direction of deflation, with oil clearly under pressure from China’s economic woes.
Another 1% decline sent the Shanghai Composite Index (SHCOMP) down to 2,702 points today. For the first time in six years, the price is lower than the panic of March 2020.
The US dollar hit rock bottom in 2008 during the US financial crisis, while the Chinese yuan has maintained a steady 7.2 to the dollar.