Name: Why the strong US dollar trend may persist Charts that Count
Uploaded: 2019-12-10T11:59:15.000Z
Duration: 4 min 19 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

00:00:05,400 --> 00:00:07,770 There's a big debate raging across Wall Street

Basic passive voice

Is it finally set to weaken versus its peers?

Or will it continue to strengthen in the coming year?

Here's a chart of the US trade-weighted dollar.

Now this tracks the dollar's value versus the currency

As you can see here, it has strengthened considerably

versus its peers since the beginning of 2018.

And it now sits at its highest level in about two decades.

It's a surprising move for a few reasons.

much to the chagrin of President Donald Trump, who

has consistently railed against the economic impact

Now the first reason has to do with the Federal Reserve.

So, a big component as to why the dollar strengthened so much

versus its peers in 2018 has to do with the fact

that the Federal Reserve was raising interest rates,

while other central banks around the rest of the world

were keeping their already low rates low,

or moving them even lower than that level.

going to consider cutting interest rates in the face

And in July, it instituted the first of three 25 basis point

The only effect the Fed's U-turn had on the dollar

was for it to strengthen versus its peers.

And this was because the likes of the European Central Bank,

the Bank of Japan, were rolling out very aggressive stimulus

that helped to explain the strengthening of the US

dollar versus its peers during 2018 persisted well into 2019.

And it looks like it's set to persist again in 2020,

said that it's going to put a stop to any additional easing

for the time being until it sees bigger deterioration

And now that brings us to our second reason.

a series of tax cuts aimed at turbocharging the US expansion.

That helped to buoy the dollar to some degree,

but economists warned that the effects of those tax cuts

would be short-lived, helping to build the case for a weaker

But that hasn't happened, as you can see in this chart,

given the fact that growth around the rest of the world

slowed dramatically, despite a series of stimulus measures put

And in Europe's largest economy, Germany,

helps to shore up the dollar versus those other currencies.

And then there's the ongoing US-China trade war.

The US dollar plays a very important role

It serves as a safe haven asset for investors who flock

as the trade war between the US and China

to some more positive developments on this front.

But in the last week, things have taken a turn a bit

next year to strike any kind of preliminary deal with China.

Within the same week, he also raised tariffs

So these trade tensions that have helped to buoy the dollar

that has dominated since 2018 of a strong dollar

looks set to persist for some time, at least.

What it would take to reverse the dollar's fortunes

would be a sizable progress on the US-China trade front,

as well as a shoring up of growth globally.

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Why the strong US dollar trend may persist Charts that Count

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