The Rise Of The US Dollar Is "Too Good To Be True".

In the global market, arbitrage is a never outdated method of operation, whether it is exchange rate differences, tax differences, regulatory differences or policy differences, investors can get trading signals, and even through trading them to get direct benefits.

Now, because of the division of policies in Europe and America, sharp investors have sniffed the signal of "policy differentiation trade", that is, it is time to bet on the appreciation of the dollar.

James Mackintosh, an analyst with Dow Jone am Co, has suggested that this week should be a perfect time to bet on the dollar's rise as the US economy grows stronger and Europe faces a low inflation problem.

Today (March 9th) is the European Central Bank launched the banknote printing plan 1st anniversary, the European Central Bank will hold its next policy meeting tomorrow.

At present, it is widely believed that the European Central Bank will further reduce the deposit interest rate which has been negative. The European central bank itself has hinted that it will relax its policy at the meeting on Thursday.

Analysts said the ECB could expand the current 60 billion euro / month quantification.

Or extend the policy after the expiry of March 2017.

In the wake of the European Central Bank's doves, the Federal Reserve's policy of tightening policy this year has once again heated up.

Data released by the US Department of labor on Friday (March 4th) showed that the number of non farm employment increased by 242 thousand in February, far exceeding the 195 thousand increase expected by the market. The unemployment rate in the United States in February was 4.9%, which is also in line with expectations.

A series of bright data strengthened the Fed's rate hike expectations, and the market is looking forward to the upcoming fed meeting this month.

The Royal Bank of Scotland economist said the next time the Federal Reserve

The time is still expected in June, but its possibility of taking action in April has not been ruled out.

In theory, if the Fed expects to raise interest rates in the light of current expectations, the dollar market is constantly warming up before the news is released, and betting on the appreciation of the US dollar is the right choice.

Of course, there is still great uncertainty in raising interest rates. After the announcement of the Fed's resolution results, it will have a new impact on the US dollar trend.

According to the theoretical analysis, the differentiation of us and European policies will bring great appreciation to the US dollar.

However, the reason seems so obvious that people are wondering whether this is "Too good to be true".

The reality also seems to support this. At present, the exchange rate of the basket of currencies made by the euro against the US dollar and against major trading partners is higher than that of a year ago.

James Mackintosh proposed no matter

The challenge of whether to launch market expectations on Thursday is to assure investors that his ammunition box is full.

Although there are continuing comments on the European Central Bank's policy of easing up, these are not very effective in changing the market outlook.

James Mackintosh pointed out that the impact of the European Central Bank's interest rate cut on financial markets may be quite different, depending on what options the ECB intends to adopt.

Now investors are faced with the question of whether gambling should be made, and bet that "policy differentiation trading" can push up the US dollar.

Although there is strong evidence to support this paction -- good economic data from the US and weak inflation data in the euro area, the policy seems to have lost its deterrent effect and has not had the desired impact.

Just like in January 29th of this year, when the central bank announced that the negative interest rate was announced, the yen did not go down, but the dollar exchange rate continued to climb.

The focus of investors seems to be that negative interest rates will erode bank profits, because residents no longer put money in the bank, but "hide under their own bed".

As long as investors believe Delagi's assurance, and the United States is moving steadily forward, then "policy differentiation trade" is likely to come back.