The US dollar plunged to a three-year low today after the Fed chairman Jerome Powell said the US central bank would continue to keep interest rates low and continue buying bonds. This has raised concerns about the rapid growth of inflation.
Such doubts have prompted the strengthening of commodity currencies as they are linked to inflation. The Canadian, Australian, and New Zealand dollars reached the highest levels against the US dollar.
The US dollar index, which measures the greenback against major currencies, declined by 0.51% to 89.705. At the same time, the pound continued to strengthen due to the progress of the Covid-19 vaccination process in Britain.
The Fed's commitment to very low rates has led some investors to fear inflation will soar as Congress launches a large-scale additional fiscal stimulus package.
The weakness of the dollar in recent days has also been due to the rise in U.S. debt returns. The U.S. Labor market reportedly recovered as initial unemployment claims fell short of expectations last week. The initial unemployment claim reading was 730,000 compared to the previous week of 841,000.
The market continues to focus on stimulus packages and U.S. bond yields
