The currency market is always in flux, and the start of 2021 has brought some interesting events already. One major point of interest this week is the value of the US dollar. Investors are already anticipating that the value of the dollar will fall significantly before the end of the year.
However, some experts are concerned that the decline in value is more than what most stock and bond holders are prepared for. The US Dollar Index, which is used to compare the values of top currencies against the dollar, has documented a depreciation of 0.4 so far in February. Keep reading for additional news and relevant information.
How do rates in the forex market affect stocks, bonds
Are you considering diversifying your portfolio and investing in international stocks? Perhaps you’ve identified a fantastic trend in tech development for an international company and intend to buy a significant number of shares? If so, make sure that you’re accounting for two avenues of risk and reward.
You still have to account for the risk of share values falling below your investment, of course. However, you also have to consider the exchange rate between the foreign currency and the USD. If stock prices rise but the value of the USD continues to drop, you may end up not benefiting at all.
Trending currency pairings
Currency trading with a forex broker is one way in which forex investors can benefit from investment. The trends of each currency can be monitored for the long or short term, and different investors may seek volatile or steady improvements.
As of the end of January, there were a handful of top currency pairings. GBP/USD has seen a steady rise over the past year, jumping another 0.65% in the recent weeks. It seems that EUR/USD is also recovering, with more than a +6.5% change over the last year. In contrast, there were notable drops in both USD/JPY and EUR/JPY.
How cryptocurrency is stacking up
Cryptocurrency continues to draw attention, and many investors are thrilled with the latest growth in share values. Bitcoin recently topped out at over $52,000, forecasting a new market cap of $1 million. The recent jumps have largely been attributed to moves by Elon Musk and major industries.
Exchange rate shifts and trends
There are some early forex predictions available for those planning their year ahead. As mentioned earlier, the USD is likely going to fall even lower, with short sellers eyeing the American currency. In contrast, the recent strength of the iron ore commodity in Australia provides strong support for AUD in 2021, assuming that demand continues to exist.
A Brexit trade deal was finally settled between the UK and the EU. The GBP is doing well but may fall slightly with additional strain from the pandemic. On the flipside, the Euro continues to grow in value. A large part of this growth can be attributed to investors pulling out of the USD and its apparent trend.