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United States

Markets

Currency Profile

The dollar—the world’s most important currency—is used to denominate the bulk of the world’s trade, reserve assets, and cross-border debt. Although the US runs the world’s largest trade and current account deficits, it does not face external financing constraints - a situation described 60 years ago as an “exorbitant privilege.” The dollar tends to perform well in global markets - not only when US outperformance enhances the attraction of the currency, but also when global economic weakness sparks a scramble to reduce liabilities. 

Outlook
Economics
Markets

United States

DXY Dollar Index

DXY Dollar Index, 1973 = 100, Updates Daily

The DXY Dollar Index measures the value of the United States dollar relative to a basket of foreign currencies. It is a weighted geometric mean of the dollar's value relative to the following currencies: EUR (57.6%), JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), CHF (3.6%). The index is widely followed by traders and media as an indicator of the dollar’s strength, but is no longer representative of the dollar’s value in trade-weighted terms - China, Mexico, South Korea, and Brazil have superseded Sweden and Switzerland as important trading partners.

United States

Trade-Weighted Dollar

Trade-Weighted Dollar Indices, Updates Daily

The Federal Reserve Nominal Advanced Economy Dollar Index is a weighted average of the foreign exchange value of the US dollar against a group of the country’s most important industrialized trading partners. The Real Broad Dollar Index is a weighted average of the consumer price index-adjusted foreign exchange value of the dollar against the currencies of a broad group of major trading partners.

United States

Year to Date Performance

Nominal Dollar Gain (+) / Loss (-) Against Foreign Currencies, % Year to Date, Updates Daily

Represents the percentage change in the nominal exchange rate relative to the US dollar year to date.

United States

Trading Ranges

Maximum Absolute Change in DXY Index Level, Calendar 1- or 3-Month Periods, Updates Monthly

Trading Ranges are equivalent to the difference between maximum and minimum DXY index levels – expressed as a percentage of the opening index level – over each calendar one- or three-month period.

United States

Annual Movement

Year-To-Date % Change in DXY, Adjusted for Breaks, Updates Daily

Historical Movement compares this year’s exchange rate movement – the thick white line – with movement in previous years – the thinner blue lines – to illustrate the degree to which the rate has moved. Performance is equal to the percentage gain or loss in the exchange rate realized over the number of trading days shown on the horizontal axis.

United States

Speculative Positioning

Net Long (+) or Short (-) US Dollar Futures Position Held by Large Speculators, Billions US Dollars, Updates Weekly

The Commodity Futures Trading Commission's weekly Commitments of Traders report provides a breakdown of the net positions for "non-commercial" (speculative) traders in US futures markets. Market participants follow the data to identify extreme long or short positions in a currency - something that can signal a trend reversal.

United States

Weighted Yield Differential

Foreign-US 10-Year Government Bond Yield Differential, %, Updates Weekl

10-year yield differentials represent the difference between the 10-year US Treasury yield and a gross domestic product-weighted basket of 10-year yields for Australia, Canada, the Euro Area, Japan, Switzerland, and the UK. Positive values indicate higher yields in US dollars relative to other currencies, while negative values imply the opposite.

WORLD

USD

CAD

MXN

EUR

GBP

CNY

JPY

AUD

+ Global

+ United States

+ Canada

+ Mexico

+ Euro Area

+ United Kingdom

+ China

+ Japan

+ Australia

Cognitive dissonance in markets begins to correct
05 December, 2023
Risk-sensitive currencies are giving back some of last week’s gains this morning, tumbling in the face of a resurgent dollar. US Treasury yields are climbing and the greenback is pushing higher as investors begin to question whether the Federal Reserve will cut rates aggressively without a “hard landing” in the economy next year. With unemployment inching up, consumer spending showing clear signs of...
RBA in focus today
04 December, 2023
• Partial reversal. US bond yields & the USD rebounded, while US equities dipped. There was no major economic news overnight.• AUD pull-back. Ahead of today’s RBA decision the AUD has lost ground. No change in rates is anticipated with focus on the RBA’s forward guidance.• US jobs. There is a slew of US jobs data out the next few days that will test expectations looking for no further...
Pivot hopes carry markets higher
04 December, 2023
Markets are blithely ignoring Friday’s hawkish guidance from Jerome Powell. Risk-sensitive assets and high-beta currencies remain well-bid even after the Federal Reserve chair said it was “premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease,” with investors instead choosing to focus on a brief aside in which he acknowledged...
USD doldrums continue
03 December, 2023
• Fed speak. Some measured comments by Chair Powell & weaker ISM data reinforced expectations the next move by the Fed could be a rate cut.• USD weaker. The drop in US bond yields has exerted more pressure on the USD. AUD has risen back up to the top of its multi-month range.• Event radar. Locally, the RBA’s last meeting of ’23 & Q3 GDP are due. Offshore, focus will be on US labour...
Canadian jobs growth tops expectations, but details point to slowdown ahead
01 December, 2023
The Canadian job creation engine topped forecasts in November, firming expectations for another hold at the Bank of Canada’s meeting next week. 25,000 new positions were added in the month, with population growth and still-high participation rates pushing the unemployment rate to 5.8 percent, up from 5.7 percent in October. Consensus estimates had pointed to a 15,000 new hires, with unemployment rising...
The peso’s bull run has run out of steam.
01 December, 2023
After a world-beating drive higher, the Mexican peso lost momentum late in the third quarter and has largely failed to regain it, staging a relatively modest rebound against a retreating dollar. Several factors are in play: A drastic increase in government spending plans – coming ahead of the presidential election in June 2024 – spooked investors. The foreign exchange commission’s decision to unwind...
The fiscal outlook still looks favourable.
01 December, 2023
Under President Andres Manuel Lopez Obrador’s recently unveiled budget plan, Mexico will run its largest deficit since 1988 next year – amounting to roughly -4.9 percent of gross domestic product, up from this year’s -3.3 percent. With global interest rates holding near post-2000 highs, higher borrowing costs could threaten credit ratings and limit the next government’s room for maneuver.  But...
Canada's economy is slowing.
01 December, 2023
With higher borrowing costs and slowing credit growth inflicting serious pain on Canada’s spectacularly indebted private sector, the economy appears poised for a hard landing. The direction of travel for residential investment is clearly down: after an early-2023 dead-cat bounce, prices and activity levels are subsiding across the country, and developers are moving to the sidelines. Energy prices...
Nearshoring hopes look overdone.
01 December, 2023
With geopolitical tensions between the US and China forcing businesses to diversify supply chains, the country’s stability, low labour costs, and geographic proximity have raised hopes that a “Made in Mexico” moment is at hand. Indeed, the country has displaced China as the United States’ largest trading partner. Share of US imports, 12-month moving average, % But under López Obrador,...
Expectations are falling.
01 December, 2023
Market illusions about the relative resilience of Canada’s economy have been exhausted in recent months, and swap-implied rate projections for the Bank of Canada and the Federal Reserve have converged in a dramatic fashion. Yield differentials and the loonie have come under sustained pressure, with central bankers on both sides of the border now seen delivering rate cuts at a roughly-similar pace through...

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