The US Dollar Index Shows Remarkable Resilience in the Currency Markets
Watch the US Dollar Index Climb this Week
The US Dollar Index is currently trading at 94.170, at midday on 10 May 2016. The index is a barometer of the greenback’s performance against a basket of 6 currencies. The US Dollar Index has a year to date return of -4.52%, in line with the poor performance of the world’s premier reserve currency over the first quarter of the new year. The 52-week trading range for the US Dollar Index is 91.919 on the low end and 100.510 on the high-end. The US Dollar Index tracks the performance of the greenback against a basket of other currencies including the following:
- The Japanese Yen – 13.60%
- The British Pound – 11.90%
- The Canadian Dollar – 9.10%
- The Euro – 57.60%
- The Swedish krona – 4.20%
Part of the reason for the strong performance of the US Dollar Index has been the weak performance of the Japanese yen. Tuesday, 10 May marks the second successive day that the Japanese yen has been weakening. Currently, the USD is trading at 109.158389 to the Japanese yen – a strong turnaround for the USD. It should be pointed out that the greenback is continuing to see substantial bullish movement this week, as the yen reverses course and starts to retreat against other currencies.
As of 7:45 a.m. (EST), the US dollar index gained 0.2% to hit 94.27. While analysts may be scratching their heads in bewilderment about the performance of the USD – given the Fed guidance of late, the greenback has clawed its way out of the mire and back into contention. There have been several changes in the FX rates of major currencies against the dollar. These include the following:
- The Brazilian real shed 1.12% against the USD to trade at 3.4771. Recall that he Brazilian real shed 4.8% against the greenback on Monday, 9 May 2016 with the impeachment proceedings against President Rousseff. It was initially believed that the impeachment process would be abandoned, but now that has been reversed and it will go ahead. The real has shed 12.21% against the greenback in 2016 and the pair sports a 52-week low of 2.9707 and a 52-week high of 4.2478.
- The CNY lost ground to the USD with the FX rate trading at 6.5208 (+0.06%), following CPI increases of 2.3% for April year on year. A big part of the price rises in China are due to the increase in pork demand (+33.5%, year on year) – a stable food item in China. Chinese demand for remains unrivaled, owing to the rapidly expanding population, and this is evidenced by 3,000 tons of frozen pork been released into the market.
- The EUR/USD is currently trading at 1.1385, up 0.02% for the day. This currency pair has a 4.81% year to date return, and a 52-week trading range of 1.0524 on the low end and 1.1714 on the high-end. This euro was bolstered by the German trade surplus of €20.6 billion in March 2016, with exports from Germany totaling €62.6 billion in the EU, with imports in the European Union totaling €53.9 billion.
- The USD shed 0.78% against the Philippine peso and was trading at 46.720 in Manila. This was due to the presidential election victory by Roderigo Duterte and his comments afterwards. While he was a divisive figure at first, his clarification of certain policies has helped to strengthen the Philippine peso.
With the USD coming out swinging, it certainly appears to be a bullish weak ahead!
About Brett Chatz
Brett Chatz is a graduate of the University of South Africa, and holds a Bachelor of Commerce degree, with Economics and Strategic management as his major subjects. Nowadays Brett contributes from his vast expertise in online trading for iForexTrader.co.uk.