US dollar (USD): special focus
Euromoney's latest coverage of the currency.
Euromoney's recent coverage and choice pickings on the US dollar:
The link appears to be finally taking shape, but with the dollar as its biggest trading and settlement currency, the scheme looks increasingly skewed towards investors in the US.
A strengthening dollar is going to make life harder for emerging markets, whether you want to hear it or not.
The country’s bankers are frustrated: the system is sound, their banks are generally well run, and yet they are among the worst performers in Latin America. Something has to give. Some hope it will be the country’s attachment to the dollar.
The 30-year bull run in bonds is far from over.
The dollar’s multi-year bull run might last a couple more months, but its fundamental underpinnings are weakening.
One of the US president’s oft-repeated election promises was a tax holiday to encourage US corporations to bring assets held abroad back onshore – if he delivers, the dollar is likely to strengthen considerably against the currencies in which those assets are held, says Nomura.
The US equity markets and the dollar have so far leaped ahead on expectations of tax cuts and rising fiscal spending. But this 'reflation trade’ equally pushes bond yields higher.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Morgan Stanley suggests the dollar is pushing up against technical barriers in a number of currencies and might be ready to break them.
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.
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.
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 looks set to be the year of the dollar, judging by the consensus among the world’s leading currency watchers.
The dollar/yen trade is showing signs of breaking higher, but can the Japanese currency maintain its weakening momentum?
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.
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 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.
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.
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.
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.
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.
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.
The breakdown in the correlation between equity and commodity prices suggests the dollar could find support.
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.
USDJPY broke through the ¥100 level for the first time since 2009 on Thursday, a move that sparked a wave of dollar buying.
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.
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.
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.
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.
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.
Stay alert to the US fiscal tragi-comedy and the monetary fallout or not, notes Commerzbank.
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.
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.
Federal Reserve vice-chairman Janet Yellen rebuffed criticism from emerging market economies over lax US monetary policy at the IMF annual meeting in Tokyo.
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.