Hacker News new | ask | show | jobs
by hehetrthrthrjn 1688 days ago
The dollar is strong right now because people are speculating that the inflation figures mean that interest rates will be higher sooner and that QE will be rolled back more quickly.

The more an asset earns, the more it is worth.
1 comments
anm89 1688 days ago
I would be hesitant to make blanket statements like that about literally anything in the forex world.

I would say that's a potential factor. Then again, I don't believe that there is much sentiment that rates are about to rise but I'm sure others would disagree.

link
hehetrthrthrjn 1688 days ago
Why? Relative interest rates are one of the main determinants of the value of a currency, and there is a very popular trade that enforces it.

The "carry trade" involves borrowing money in a low interest currency (say EUR) and selling that to buy a higher yielding currency (USD) and pocketing the difference in interest rates.

link