The US dollar was thinly weakened in the sales of this week. However, it is still in the high level which was formed since last week. When this news released, the DXY or index of dollar is around 92.95 or decreased by 0.08 percent from the daily open level.
In the NFP data release last week, the job field in America increased by 916k in March. That beyond the expectation of 647k and it’s period value before in 468k. Meanwhile, the unemployment rate in that country also decreases. That was from 6.2% to 6.0%.
It was in line with the expectation. The US dollar moved smoothly after the release of employment data. What is the cause? Mostly it was caused by the minimum market response ahead the easter holiday moment. Until now, that main currency is still highlighted.
USD is Able to Build More Power
Many people believe that the USD is still able to build it’s power to get the bullish rally again. Why? It is because the investors are looking for the further clues to confirm the prospect of US economy recovery from the effect of pandemic happened since last year.
Before, an analyst thought that dollar will be weakened significantly. However, that was not happened. The USD bullish trend is so strong since the first quarter because it is supported by the increase of the obligation yield result and rebound prospect of economic in America.
That is why; he thought that the best thing to do by investors are following the bullish trend. After creating the biggest quarter rally for almost three years in January – March, the USD index is now reaching the biggest point since November 2020. That is a good thing.
The next focus owned by investors is the non-manufacture PMI data release in the United States of America. The service sector in that country is predicted will be increasing from 55.3 to become 58.5 in February. Dollar has a chance to continue it’s power.
The UOB and it’s Research Note
Based on the explanation above, USD can continue the strength if the data release is better than the expectation. Meanwhile, the UOB or United Overseas bank in their research note due to the dollar strengthening stated something due to the situation happened.
They say that USD still has a space to make the second quarter rally is longer than before. However, it will move downward in the second semester this year. The UOB analyst team said that they will still in their opinion that rebound happened in March is not the beginning.
It is especially about the beginning of the strengthening trend which may be happened continuously at least for the rest of this year. The main reason and the most important one is the United States obligation yield result as the cause of the dollar trend so far.
That result seemed decline after the sharp increase happened during February and March. Besides that, the Fed will be patiently waiting for the US economy recovery before deciding to normalize their monetary policies. Many predictions are then made by this situation.
The New Decision by the Fed
Their macro team predicted that the Fed will start the plan to reduce the purchase of obligation at least at the end of 2021. Another possible time is at the beginning of 2022. The first reference interest rate will be applied in 2023 or next year.
The other factors are a brighter global growth in line with the vaccinations speeds done in all over the world. It means that the risky currencies included the Asian will get a step and has a possibility to be strong again to the USD.
That is why; they still maintain the view that usd may be weakened in some quarters in the future. It is especially after the strength happened in the second quarter of 2021. So far, that was the possibilities to be done in the future.
