• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
  • Best Managed Accounts
  • Forex Robots
  • Forex Brokers
  • Forex Signals
  • Social Trading Platforms

Forex Traders Guide

The Ultimate Forex Knowledge Base

  • Robots
  • Start Guide
  • Glossary
  • Basics
    • Currency Pairs
    • Charts
    • Candlesticks
    • Trading Tips
  • Strategies
    • Technical Analysis
    • Fundamental Analysis
    • Day Trading
    • Scalping
    • Swing Trading
    • Trend Following
  • News
  • Reviews
    • Forex Robots
    • Forex Brokers
  • Mustreads
  • Crypto Trading

The US Dollar Underperforms the Majors, the Russian Ruble Already Feeling the Impact of Sanctions From Washington

April 15, 2021 by Forex Winner Leave a Comment

The US Dollar Underperforms the Majors, the Russian Ruble Already Feeling the Impact of Sanctions From Washington
  • The United States has formally accused the SVR, a Russian foreign intelligence service, of the SolarWinds hack carried out early this year. Consequently, the US government is initiating a range of sanctions against targeted Russian businesses and individuals. Now, certain companies and debt with Russian ties are blacklisted from the US-led global financial ecosystem.
  • As soon as the news broke on Thursday at around 04:00 am UTC, the USD/RUB pair jumped 1.97% to 77.511 – the intraday peak so far – by 07:00 am UTC.  
  • Lower US bond yields sucked the air out of the US dollar, leaving it weak against majors such as the euro and the British pound.

Retail sales are up, but treasury yields are stuck in decline mode

Loosening of restrictions on movement in parts of the US throughout March enabled more Americans to spend on retail shopping. Retail sales data for March best explains the impact of the reopening. The latest government data – released early Thursday – show retails sales surged 9.8% during the month, which far outstrips consensus expectations. The last time the Commerce Department reported such a margin in May 2020, when the economy was unshackling itself from the bonds of the pandemic.

Yet, the positive figures were not sufficient in persuading the forex market to snap up more greenbacks. The US dollar index (DXY) was down 0.01% (to 91.662) at the time of writing, which is an improvement from the day’s lowest point at 91.497 at 05:00 UTC Thursday. Though this situation might be mind-boggling, one can easily explain its cause.

Best Forex Robots ›

Compare leading trading systems on the market

US dollar index performance on Thursday

Figure 1: US dollar index performance on Thursday 

The reason for the greenback’s underperformance against majors when retail sales data is positive is declining Treasury yields. Last month, investors were hoping that the US Fed would tighten interest rates in response to the excess liquidity from the recent stimulus package. As a result, the Treasury yields surged, but the scenario is different this month. 

US Treasury yields’ performance over the past month has been dismal, declining 11.11%. The performance of the past five days is at -2.82%. At the time of writing, the yield for the US 10-Year Treasury Note was flirting with 1.599% after closing at 1.641% on Wednesday. 

The Russian ruble is the biggest loser today

Thursday was a hostile day in the market for the Russian ruble. The currency was already in the red year-to-date at -2.3% against the greenback before the reports of new sanctions flooded the wires. The USD/RUB pair was up 0.70% at press time. 

Even worse for the pair is that the selling pressure in the market seems strong enough to carry through a few more days. Although the MACD (in the figure below) shows the number of sellers thinning, the RSI indicates there is strength for the market to dump more of the pair.

USD/RUB (1-day price chart)

Figure 2: USD/RUB (1-day price chart) 

A weaker dollar is supporting commodity currencies

While addressing an Economic Club of Washington, DC event on Wednesday, US Fed chair Jerome Powell said the Fed would begin tapering the bond purchasing program well before initiating any interest raise policy. The market interpreted these comments as an implication the greenback will remain weak for the foreseeable future. 

The weak dollar generates increasing demand for commodities in global markets, and commodity currencies are the ultimate winners. On Thursday, the Australian dollar finally managed to break out of a tight trading band established for several weeks now by jumping to 0.7754 against the USD. At the time of writing, the highest peak of the day was at 0.7759, established at 05:22 EDT. 

Best Forex Robots ›

Compare leading trading systems on the market

Filed Under: Forex News

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Best Forex Robots

  1. Techberry 8.7
  2. Happy Forex 8.0
  3. Forex Fury 7.7
  4. Promax Gold EA 6.8
  5. Gump EA 6.4

Best Forex Brokers

  1. Techberry 8.7
  2. XM 8.2
  3. eToro 8.1
  4. Pepperstone 8.1
  5. IG 8.0

Latest News

How to Predict Forex Movement?

November 30, 2022

The Red Dog Reversal: A Strategy for Day or Swing Trading

November 9, 2022

Tron DAO to Pull Out Additional 3 Billion TRX

Tron DAO to Pull Out Additional 3 Billion TRX

June 16, 2022

Footer

Forex Broker Reviews

Hot Forex

HotForex Review

November 10, 2019 By Forex Winner

FBS

FBS Review

January 29, 2020 By Forex Winner

FXTM

FXTM [ForexTime] Review

August 9, 2019 By Forex Winner

Forex Robot Reviews

Profit Lab EA Review

Profit Lab EA Review

June 28, 2022 By Forex Winner

GoodMorning EA

GoodMorning EA Review

June 23, 2022 By Forex Winner

FxHT Daily Trend EA Review

FxHT Daily Trend EA Review

June 22, 2022 By Forex Winner

EMAIL NEWSLETTER

Sign up to receive exclusive forex trading guides and insights from our team of experts!

Copyright © 2023 · Forex Traders Guide · About Us · Contact Us
Privacy Policy · Risk Disclosure