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21 Sep 2015
USD: The Dollar index perspective – BBH
FXStreet (Delhi) – Research Team at BBH, note that from an economic rather than an investment point of view, the Fed's real broad trade-weighted index is the most important measure of the dollar.
Key Quotes
“In August, it made a new cyclical high of 97.30. It finished last year near 90.55. It is up almost 21% from the July 2011 record lows. If this dollar rally matches the magnitude of the Clinton dollar rally (34%), the real broad trade-weighted index would rise toward 107.”
“If the Obama dollar rally, driven by an extended divergence of monetary policy, is the average of the Reagan and Clinton dollar rallies (the other two dollar rallies since the end of Bretton Woods), the real broad trade-weighted index would rise toward 115.5.”
“The dollar does not appear to be making much headway this month. In fact, September could be only the third month this year (so far) that the real broad trade-index has not risen. Thus far this month, the dollar has fallen in nominal terms against its major trading partners save the Canadian dollar, against which it has risen about 0.6%. Through September 18, the yen has risen 1.0% against the dollar, the euro is up 0.8%, the Mexican peso is up 0.6%, and the Chinese yuan is up about 0.25%.”
Key Quotes
“In August, it made a new cyclical high of 97.30. It finished last year near 90.55. It is up almost 21% from the July 2011 record lows. If this dollar rally matches the magnitude of the Clinton dollar rally (34%), the real broad trade-weighted index would rise toward 107.”
“If the Obama dollar rally, driven by an extended divergence of monetary policy, is the average of the Reagan and Clinton dollar rallies (the other two dollar rallies since the end of Bretton Woods), the real broad trade-weighted index would rise toward 115.5.”
“The dollar does not appear to be making much headway this month. In fact, September could be only the third month this year (so far) that the real broad trade-index has not risen. Thus far this month, the dollar has fallen in nominal terms against its major trading partners save the Canadian dollar, against which it has risen about 0.6%. Through September 18, the yen has risen 1.0% against the dollar, the euro is up 0.8%, the Mexican peso is up 0.6%, and the Chinese yuan is up about 0.25%.”