US dollar: special focus

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The dollar suffered as a result of the Federal Reserve's massive quantitative easing programme. In 2012 it was the second-weakest performing G10 currency after the yen. That helped extend the bear trend that the dollar has been trapped in since 2002. But now, sentiment towards the dollar appears to be turning. Many believe that US growth is set to be the strongest among developed nations and that, while it will not happen immediately, the Fed will be the first among the world's big-three central banks to start withdrawing monetary stimulus. Could the 11-year regime of dollar weakness be about to end?


Euromoney's recent coverage and choice pickings on the US dollar:

FX versus Trump: Too calm for comfort?
November 2016
Better hedging seems to have enabled the FX market to shrug off concerns over Donald Trump’s victory in the US presidential elections, with some strong moves in Asian trading giving way to more restraint when European markets opened.

US dollar: What a difference a year makes in FX
April 2016
The US dollar’s inexorable rally has juddered to a halt this year as it slides versus all but one of the world’s major currencies. Most analysts are sceptical of a strong return and Wednesday’s FOMC minutes only confirmed the US Federal Reserve’s caution.

Against the tide: Asia will drive the dollar 
March 2016 
Weaknesses in Japan and Asia will mean a flight to quality.

What lies in store for FX in 2016
January 2016
Obama dollar rally: the dollar strengthened rapidly last year, and analysts at Brown Brothers Harriman (BBH) believe this is an ongoing trend.

Economists sombre on China monetary trap
December 2015
Dollar dominance continues; RMB inclusion in IMF reserve basket symbolic.

Against the tide: The Fed is a macro risk
October 2015
The dollar is likely to stay strong. First, there’s divergent monetary policy between the main economic blocs, with the Fed tightening and the Bank of Japan and European Central Bank easing. This divergence will continue to drive US dollar strength.

Against the tide: World of the dollar and yen
August 2015
Structural problems and over-leverage mean the focus will switch to Asia for the next global currency moves.

FX swings knock company earnings
May 2015
The surprise outright Conservative win in the UK election has boosted the pound against the dollar – meaning that some UK companies’ earnings are worth less.

Dollar rally running out of steam
April 2015
The meteoric rise of the US dollar seems unstoppable but cynics are beginning to emerge, as economic data and relative valuations suggest the currency’s ascent is starting to look overheated.

FX vol threatens portfolio return
March 2015
The US dollar is widely expected to continue appreciating for years to come, as its economy rebounds. Analysts at Barclays examined the impact on an international portfolio, hedged and unhedged, of a trend rise in the dollar.

Rising dollar makes renminbi second-most overvalued currency
February 2015
What goes up must come down, even the renminbi. Having appreciated by more than 30% since 2008 against a trade-weighted basket, there is growing consensus that 2015 will see further falls in the Chinese currency.

The year of the dollar bull
December 2014
It has been a year of two halves for FX, with an opening seven months characterized by low volatility and few attractive trading opportunities for FX managers, before a dollar bull market roared into life in August. It is arguably the first such market for 20 years, bringing with it a rise in volatility and enhanced opportunities for FX traders.

The new normal for EMs: the dollar, China and oil
November 2014
All three are moving in novel directions.

Dollar-equity correlation conjures up memories of dotcom boom
October 2014

The US dollar has become highly correlated with equities in recent months, conjuring up memories of the late 1990s and the dotcom boom, the last time the two asset classes rose together for such an extended period. But the differences between the two periods are as illustrative as their similarities.

ECB-Fed divergence triggers corporate hedging
October 2014
The US has reached a milestone by announcing the end of its eight-year quantitative easing stimulus programme as its economy recovers, but the news highlights the increasing policy divergence between the US and Europe. Corporates have as a result started factoring in increasing euro weakness ahead of 2015.

Rising USD tide sinks EM boats
October 2014
The dollar has begun what many expect will be a prolonged march higher after a multi-year bear run. A strengthening greenback has traditionally been bad news for emerging markets and the early signs suggest this time will be no different.

Volatility comeback: reality or wishful thinking
July 2014
Morgan Stanley suggests the dollar is pushing up against technical barriers in a number of currencies and might be ready to break them.

US dollar divides currency analysts
May 2014
2014 was hailed as the year of the dollar comeback by analysts across the Street, but the prediction has fallen flat as the US currency has failed to strengthen against the euro. Forecasters are divided as to what the future holds for the world’s most traded currency pair.

Fed to emerging markets: 'Our currency, your problem' – for now
January 2014
The Fed added insult to emerging-market injury when it failed to acknowledge the EM rout this week, confirming the resolutely domestic focus of its monetary stance despite the international spill-over effects. The move reignites the debate about global monetary co-ordination.

Dollar, as reserve currency, is a virtue, not a trap: a response to Eswar Prasad
January 2014
Forget the doom over currency wars – the dollar-led monetary system boosts global stability, while China’s fixed exchange-rate regime poses risks, argues the IIF’s Charles Collyns, a former US Treasury official, as debate rages over the role of the dollar in the emerging world, in particular.

2014: another year of the dollar; currency could shift into new bull market
December 2013
2014 looks set to be the year of the dollar, judging by the consensus among the world’s leading currency watchers.

USDJPY could be ready for lift-off
November 2013
The dollar/yen trade is showing signs of breaking higher, but can the Japanese currency maintain its weakening momentum?

Czech koruna among the most vulnerable to a dollar rebound
November 2013
Authorities in the Czech Republic might be pleased to learn that the koruna is one of the emerging market (EM) currencies most vulnerable to a dollar rebound.

Dollar confused amid political risk
October 2013
Foreign exchange markets spent last week in thrall to US political headlines as the dollar reversed its weakening trend amid range-bound and volatile trading in G10 crosses.

Washington politics puts dollar in peril
October 2013
Washington dysfunction is weighing on the US dollar. The federal government shutdown, which began on October 1 after Congress was unable to reach an agreement on stop-gap legislation to fund government operations, has seen the dollar fall to an eight-month low against the euro.

FX vol enters the dead zone; fears mount over calm before the storm
September 2013
Implied FX vols for the dollar against other G10 currencies slipped across the board in the wake of the Federal Reserve’s decision not to start tapering its asset purchases after its policy meeting last week.

Summers not over for dollar strength
September 2013
The decision by Larry Summers to withdraw his candidacy for the Federal Reserve chair saw the dollar fall sharply, but the currency could benefit over the longer term.

Hawkish Fed cures dollar’s schizophrenia
June 2013
The hawkish stance of the Federal Reserve at its policy meeting has put a stop to the dollar’s divergent performance, which had seen it lose ground against leading currencies and advance against most emerging market (EM) currencies in recent weeks.

Gear up for emerging market local bond sell-off amid global deflation
May 2013
A sell-off in emerging market local currency debt is on the cards amid global deflation, a stronger dollar and rising US Treasury yields, say bearish analysts. If these predictions ring true it won’t be pretty for FX unhedged real money investors.

Fed QE not the only game in town; correlation breakdown points to currency regime
May 2013
The dollar index has risen by about 3.5% this month. Furthermore, the dollar has been the best-performing G10 currency in 2013, supported by rising real yields in the US.

Dollar the winner in a commodities anti-super cycle
May 2013
The breakdown in the correlation between equity and commodity prices suggests the dollar could find support. 

Enjoy the dollar bounce but broader downtrend still intact
May 2013
The dollar’s march higher during the past few weeks has been triggered by expectations of stronger US growth, but the question remains whether it signifies the start of a broad-based dollar revival and the end of the multi-year downtrend in the currency. 

Perfect storm pushes USDJPY through ¥100
May 2013
USDJPY broke through the ¥100 level for the first time since 2009 on Thursday, a move that sparked a wave of dollar buying. 

Gold bombs as Korean nuclear crisis shows dollar true safe haven
April 2013
The fall in the price of gold after the unveiling of the Bank of Japan’s (BoJ) massive monetary expansion reveals the true driving force behind the price of bullion.

Dollar shedding its funding currency status
March 2013
The strength in the dollar after Wednesday’s robust US retail sales data highlights the shift in the foreign exchange market that has seen the US currency shed its mantle as the funding currency of choice in the first few months of this year.

Dollar strength could trigger emerging market crisis – UBS
March 2013
A repeat of an emerging market crisis of yesteryear can't be ruled out – thanks to the prospect of a sharp contraction in domestic credit supply and portfolio flows – amid dollar strength, warns George Magnus at UBS.

Call for dollar bull-run premature
February 2013
The potential for the Federal Reserve to exit its ultra-loose policy stance has led some to believe that 2013 is the year the dollar will stage a rally and break free from the bear market that has pressured the currency for more than 10 years – but those calls are likely to be premature. 

Fiscal cliff deal paves way for dollar slide
January 2013
The passing of the deal to avoid the fiscal cliff in the US opens the way for continued dollar weakness in the short term, while its longer-term prospects have also taken a blow.

Would the US minting of a trillion-dollar coin torpedo the Fed’s QE policy?
January 2013
Stay alert to the US fiscal tragi-comedy and the monetary fallout or not, notes Commerzbank.

USD and the election: It’s the fiscal cliff, stupid
November 2012
The dollar comes into a tight US election on the front foot, but that is more a reflection of concerns elsewhere in the world than the voting intentions in Ohio. That could be about to change. 

RMB displaces USD as Asian reference currency; new currency bloc emerges
October 2012
The RMB has become the dominant reference currency in east Asia, eclipsing the USD and the EUR, according to a Washington-based think tank. It is an event that some believe will herald one of the most important new developments in the world’s financial system.

Fed defends quantitative easing amid 'currency war’ fallout
October 2012
Federal Reserve vice-chairman Janet Yellen rebuffed criticism from emerging market economies over lax US monetary policy at the IMF annual meeting in Tokyo. 

Dollar retreat warrants caution
August 2012
The decline in the dollar amid heightened expectations of a further round of quantitative easing (QE3) from the Federal Reserve might create a buying opportunity in the US currency.