Why does the usd rise

The dollar index, which measures the greenback against a basket of major currencies, touched The spike in U. Treasury yields - so it's a fairly simple story of a widening rates differential A Deutsche Bank monthly market sentiment survey this month noted that an overwhelming majority of respondents expect U. Treasury yields to rise from current levels. So why is the dollar rising instead? A rise in infections and new and extended business lockdowns in several European countries are weighing on economic growth expectations for the eurozone, translating into weakness for the formerly robust euro.

Meanwhile, a robust U. For much of the pandemic, there was a relatively strong relationship, with a weaker dollar translating into stronger global equities see chart above. That occurred as central banks across the developed world cut policy interest rates to what they considered the effective lower bound and pledged to keep them there for some time, which meant relative moves in interest-rate expectations were fairly small, Allen explained.

As a result, investor appetite for risk, which tended to mean a weaker dollar, became the main driver of developed market exchange rates. The relationship started to break down at the beginning of this year, however, as the dollar took back some ground even as global stock markets continued to climb, Allen noted. More In U. Closing Bell. BlackRock's Koesterich on how the strength of the dollar impacts equities. Chinese high-yield bonds will still attract international investors: Strategist.

Fed is 'running out of runway' to announce taper timeline: Strategist. Valuations of dollar-denominated Asian high-yields look 'interesting': Analyst.

Significance of El Salvador's Bitcoin adoption is 'overplayed': Analyst. The U. Squawk Box. Former Dallas Fed president Fisher on August jobs miss, taper timeline. Fast Money. Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways Stock indexes tend to rise along with an increase in the value of the U. More important to an investor is the impact of the dollar's rise or fall on the individual stocks they own.

Companies that rely on imports thrive when the U. Companies that sell their products globally thrive when the dollar is weak. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.

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