Alicia García Herrero (Natixis) | The US dollar has officially ruled the international monetary system since the Bretton Woods Agreement in 1944. No other currency has been able to challenge the dollar notwithstanding the ups and down of the US economy both in terms of growth but also inflation. Notwithstanding its overall dominance, things are changing. This is particularly true for the waning share of the US dollar in the…
Steve Caruthers & Steven Sperry (Capital Group) | There’s no denying that the relentless rise of the U.S. dollar has been challenging for investors in non-U.S. equities. The currency translation effect (that is, losses and gains resulting from the conversion of non-U.S. investment returns into U.S. dollars) has dented global equity portfolio results. There are two ways currency movements can affect investors. In addition to translation effects at the portfolio…
Luis Alcaide | The world is gradually moving towards a multiple reserve system. In its latest World Economic Outlook, the IMF notes that when the euro made its appearance, the dollar accounted for 71% of foreign exchange reserves. In the last quarter of 2020, dollar reserves held by central banks had fallen to 59%, the lowest share in the last 25 years. The complaints in 1960 from the then French…
Let us talk about the relation between the US dollar price of gold and the quantity of US dollar. In fact, one would think that it is, economically speaking, a rather straightforward relationship: All you need is to compare the supply of physical gold and the quantity of US dollar.
The US dollar was broadly stable over the past month, up against the euro and Japan’s yen but down against the New Zealand dollar and sterling. Elsewhere the Norwegian krone depreciated further, hitting new lows. The market appears to lack conviction in terms of the direction of the greenback.
Keith Weiner via TrumanFactor | Unless you’re living under a rock, you know that we have an administered interest rate. This means that the bureaucrats at the Federal Reserve decide what’s good for the little people. Then they impose it on us. In trying to return to freedom, many people wonder why couldn’t we let the market set the interest rate. After all, we don’t have a Corn Control Agency or a Lumber Board (pun intended). So why do we have a Federal Open Market Committee? It’s a very good question.
MADRID | March 15, 2015 | By JP Marín Arrese | The markets have discounted an unchallenged drift upwards of the US currency, after the ECB embarked on its ambitious asset-buying scheme. Yet few anticipated the move might come so soon and reach such a rapid pace. As the Euro turns its retreat into a disorderly rout, emerging economies like Brazil are falling under unbearable pressure. The dollar’s swift upsurge has pounded global markets.
ZURICH | UBS analysts | The recent general strength of the dollar has a bearing on commodity prices, clearly. Commodities are universally priced in dollars, and as homogenised products dollar appreciation should lead to a decline in commodity prices in dollar terms. However, the strength of the dollar against sterling (in 2008/9) or against the yen (sporadically since 2012) did not lead to UK or Japanese exporters cutting the dollar price of their manufactured products or services.
MADRID | By Francisco López | The strength of the dollar –which is in maximum levels and has appreciated by almost 11% against the euro since January 2014, has started to cast doubt among market watchers. Some experts consider that such strong appreciation does not correspond to Janet Yellen’s cautious decisions or to the low inflation expectations at a global level, which leaves room to central banks to maintain loose monetary policies.
MADRID | The Corner | The positive evolution of the American economy and the uncertainty about Europe’s economic recovery, after disappointing data published this week, have led the USD to Euro exchange rate to advance to its highest best level in nine months.