Yellen has set the USD direction by stating that she won't seek a weak dollar. However, President Biden has to find the money for his USD$2.8T ($1.9T+0.9T) stimulus aids. Therefore, he has no choice but to print more USD but doing that will devalue the USD which contradicts Yellen's intention.
What can Yellen do? She has to work with the US FED to increase the US interest rates so that the USD won't depreciate. In view of this, the USD index has started to creep higher.
http://sg-stock.blogspot.com/2021/01/the-us-inflation-is-coming-part-3.html
1 comment:
https://www.ft.com/content/20f39e33-e360-479e-82e2-5441d24f0e0b
Bad news for USD because the EU will reduce its reliance on USD. This means that the USD will depreciate as there is lesser USD demand. Therefore, the US interest rates will have to rise to attract USD demand.
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