Currencies do not have an absolute measuring rod, so it is difficult to judge the validity of a level by moving with a “relative” evaluation between currencies.
The mechanism by which the US dollar strengthens and depreciates is complicated, but the basic factors can be broadly divided into two.
One is the trend of buying and selling goods and services across national borders.
On the other hand, if the number of foreign tourists visiting US who use US information services via the internet increases, the movement to exchange foreign currency for the US dollar will also increase, and the US dollar will tend to appreciate.
On the contrary, the expansion of United State imports and the increase in tourists travelling from the US to overseas can be the factors that lead to the depreciation of the US dollar.
In modern times, the movement of lending and borrowing money and investing across national borders is larger than the trend of buying and selling goods such as exports and imports, so that is more likely to influence the exchange rate. Moreover, investment experts collect and analyze all political, economic and social information from around the world to decide when, in which country and how much money to invest.
Characteristics of the US dollar:
The US dollar, which has the largest trading volume in the world, is widely used not only in the United States but also for the settlement of trade and international financial transactions.
The United States is expect to continue to grow in its young population and has high potential for growth. In addition, the “twin deficits (fiscal deficit and current account deficit)” that once suffered are also improving.
In particular, the current account deficit is expect to improve in the future the dramatic increase in domestic energy production due to the shale revolution.
As the Euro area struggles with its own problems, and the US dollar continues to play a central role in the foreign exchange market. It should be noted that the US dollar quote is important not only for the Canadian dollar, but for all currencies.
Monetary policy is the most important factor in looking at the US dollar. The Federal Reserve Board (FRB), and the central bank meets the FOMC (Open Market Committee) eight times a year to make monetary policy decisions. A press conference for the chair will held. Four of these will publish the economic outlook and rough monetary policy forecasts of FOMC participants.
In addition, most important is the employment statistics released on the first Friday of every month. Unlike other central banks, the Fed has a mission not only to stabilize prices, but also to maximize employment. Therefore, employment statistics not only reflect economic trends vividly, but also have a great influence on monetary policy. In addition to employment statistics, retail sales, price statistics, the business sentiment index, district federal bank economic report (beige book), etc. are economic indicators that you should keep in mind. In addition, bond (interest rate) and stock price trends are highly linked to the US dollar and have a large impact on the global financial markets.
US Dollar Exchange Trends:
US Dollar Exchange trends with foreign countries.
Fluctuation factors in the US dollar:
Main Raising Factors
|International affairs||Increased geopolitical risks such as military conflicts and the rise of global financial instability.|
|Politics||Guidance and acceptance of the dollar’s appreciation by VIPs|
|Financial policy||Monetary tightening (increasing observations)|
|Economic indicators||When economic indicators such as employment statistics, retail sales, and ISM manufacturing index are better than market expectations|
|Other||Improvement of fiscal balance and current balance, rising stock prices and market interest rates|
Main factors of decline
|International affairs||Retreat of geopolitical risk and financial instability|
|Politics||Inducing the depreciation of the dollar of VIPs, accepting remarks, etc.|
|Financial policy||Monetary easing (increasing observations)|
|Economic indicators||If economic indicators are bad numbers below market expectations|
|Other||Deterioration of fiscal balance and current account balance, stock price depreciation and market interest rate decline|
Rising factors and falling factors are general guidelines depending on the current environment, and the price movement may be the exact opposite depending on the degree of attention and perspective of the market.
The movement of money between countries is very complicated. Therefore, the exchange rate also fluctuates in a complicated way.
United States economic and trade data:
|Nominal GDP amount||US $ 19,485.4 billion (2017 Source: IMF)|
|Real GDP growth rate||2.2% (2017 Source: IMF)|
|GDP per capita||US $ 59,792 (2017 Source: IMF)|
|Budget deficit to GDP ratio||3.8% (2017 Source: IMF)|
|Consumer price index increase rate||2.1% (2017 Source: IMF)|
|Unemployment rate||4.4% (2017 Source: IMF)|
|Current balance (balance of payments basis)||-4491,142 million US dollars (2017 Source: JETRO)|
|Trade balance (balance of payments base, goods)||-8,07,495 million US dollars (2017 Source: JETRO)|
|Foreign currency reserves (excluding gold)||US $ 122,178 million (Source: JETRO 2017)|
|Export value||US $ 1,550.7 billion (2017 Ministry of Foreign Affairs)|
|Import value||US $ 2,361.9 billion (2017 Ministry of Foreign Affairs)|
|Export items (upper items)||Auto Parts, Industrial Machinery, Aircraft, Automobiles, Pharmaceuticals (2017 Ministry of Foreign Affairs)|
|Imported items (upper items)||Pharmaceuticals, mobile phones and household goods, automobile parts (2017 Ministry of Foreign Affairs)|
|Export partner country (higher country / region)||Canada, Mexico, China, Japan, UK (2017 Ministry of Foreign Affairs)|
|Import partner country (upper country / region)||China, Mexico, Canada, Japan, Germany (2017 Ministry of Foreign Affairs)|