A Snapshot Of The U.S. Dollar

Bob Carey
Chief Market Strategist

Bio
X • LinkedIn

Blog Home

Send Us Your Comments And Questions

RSS Feed

A Snapshot Of The U.S. Dollar

Posted Under: Conceptual Investing

View from the Observation Deck

We get asked from time to time what our take is on the U.S. dollar and where we think it may be headed next.
The dollar is still regarded as the world's primary reserve currency. Its relative strength over time can be influenced by such things as central bank monetary policy, geopolitics and trade.
U.S. investors with exposure to foreign securities, commodities and the stocks of U.S. multinational companies are particularly vulnerable to fluctuations in the U.S. dollar.
Predicting the direction of the dollar, or any currency, can be a daunting task, even for professionals who specialize in it. One thing we can provide is some context.
As indicated in the chart above, as of 11/13/20, the 10-, 20- and 30-year averages for the U.S. Dollar Index carried readings of 89.62 to 91.16, which is a relatively tight range over a span of 30 years.
When the Trump administration officially launched its initial round of tariffs on 3/8/18 targeting steel and aluminum imports the U.S. Dollar Index (DXY) stood at a reading of 90.18, in line with the historical averages.
To add some additional context, over the past 30 years, the index peaked at a reading of 120.90 on 7/5/01, while hitting a period-low of 71.33 on 4/22/08, according to Bloomberg.
Citigroup estimates that the dollar could decline by as much as 20% from its current level in 2021 should the COVID-19 vaccines become widely distributed and help boost global trade and economic growth, according to Bloomberg. It noted that investors could rotate out of U.S. assets into international assets if growth overseas accelerates faster than in the U.S. The last time the U.S. Dollar Index was below a reading of 75 was in October 2011.

This chart is for illustrative purposes only and not indicative of any actual investment. Investors cannot invest directly in an index. The U.S. Dollar Index (DXY) indicates the general international value of the dollar relative to a basket of major world currencies.

Download a PDF of this post, please click here.

Posted on Tuesday, November 17, 2020 @ 1:26 PM • Post Link

Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

Most Current Posts

<<< Newer Posts • Older Posts >>>

Search Posts

MARKET ANALYSIS

Market Commentary and Analysis
•	Market Commentary Video
•	Monthly Talking Points
•	Quarterly Newsletter
•	Market Observations

Subscribe To Receive Email

PREVIOUS POSTS
•	Every Year Looks Volatile Compared To 2017
•	A Snapshot Of Gold, Silver And The Miners
•	Sector Performance Via Market Capitalization (Since Trump Was Elected)
•	Passive vs. Active Fund Flows
•	The Real Rate of Return on the 10-Year Treasury Note is Negative
•	A Snapshot of Growth vs. Value Investing
•	S&P 500 Index Dividend Payout Profile
•	How Stocks Have Fared Since Donald J. Trump Was Elected President
•	Low U.S. Consumer Credit Default Rate A Nice Tailwind For Discretionary Stocks
•	A Global Snapshot Of Government Bond Yields