The index of dollar or DXY maintained its position around 91.80 in a sales done on Monday. That happened because of the obligation yield increase. It is known that the obligation rose up and reached the 1.64% on Friday as a highest record.

That was the highest achievement since January 2020. The market worries about inflation speed are continuing to support the bullish momentum for the obligation yield and the United States dollar value. Furthermore, the stimulus also has a role.

Joe Biden has been signing the fiscal stimulus law last week. It means that the direct cash fund and any other kinds of funds are ready to be distributed to society this week. That thing increased the worry of market participants due to inflation.

Why Inflation May Happen

The condition above increases the possibility of inflation. It is because of the increase of the consumers’ shop. Furthermore, America also does a good job of vaccination which this progress may speed up the economic recovery and activities in that country.

That can be seen from the lockdown decision which was ended. The basic scenario is that people can see the continuous recovery and vaccine distribution. Furthermore, the infection situation will be better as well. The dollar is on a good trend.

That currency is in an increasing trend together with the yield treasury. There are not many changes in that view. USD will be so strong to Yen and Euro in a short-term condition. However, it is not yet strengthening the commodity currencies.

It is because the commodity prices are increasing. In several days ahead, the market attention will be focused on the monetary announcement from the Fed. The response made by its leader which was ignoring the obligation yield increase has been supporting the USD rally.

USD / JPY Is Stronger at the Moment

The same situation may happen if the other members are not responding to the obligation yield increase in the next FOMC meeting. The Japanese Central Bank is also scheduled to hold a meeting this week, but significant changes may not be made.

When this news is made, the USD / JPY was continuing its strength at around 109.25. That was a brand new highest record since June 2020. Meanwhile, the EUR / USD was not too good. It was located near its lowest level in three months.

The surprising thing is the USD / CAD which reached its lowest record since February 2018. That was located around 1.2480 because of the fantastic Canadian employment release and also the increase of crude oil prices. The American dollar was weakened.

It is especially to fight the CAD right now on the sales last week. When the Monday Asian session was going to be closed, the USD/CAD was still in their lowest range since February 2018. It was around 1.2470. There are some factors that support it.

The Two Important Factors

So far there are two important factors that support the loonie increase. Those are the significant increase in Canadian employment and the world crude oil prices rally. On Friday, the Statistic Institution of Canada reported the 259,000 increase.

It was related to the job there along with February 2021 because of the loose lockdown. That numbers are higher than the consensus estimation which is only 75,000. As the impact, the market is started to speculate that the Canadian Central Bank will start tapering.

It is the cut of the obligation purchase program. Maybe, the tapering will be done next month. That Bank is now providing the obligation purchase with 4 billion speed per week to support the economic recovery. However, other decisions may be made after their meeting.