The Dollar -- December 24, 2020

For the dollar, it appears the number to watch: 90. 

From twitter today:

Summary, Trading Economics: 

The dollar index remained below 90.5 in the fourth week of December, stronger than an over 2-1/2-year low of 89.80 touched in the previous week but much weaker than the 100 mark reached in the beginning of the coronavirus pandemic. 

Prospects of a swift economic recovery in 2021 as the Covid-19 vaccine rollout started, a new fiscal stimulus bill, bets the Fed will keep its monetary policy ultra-accommodative and prospects the EU and the UK will finally reach a post-Brexit trade deal have been raising investors risk-appetite, pushing the dollar down. 

Still, concerns about the new coronavirus strain have prevented further losses. 

Comment: one wonders what a "major" shooting war in the Mideast would do? Or for that matter, a "major conflict" involving China with some other country?

 

US dollar index, wiki:

It is a weighted geometric mean of the dollar's value relative to following select currencies:

• Euro (EUR), 57.6% weight
• Japanese yen (JPY) 13.6% weight 
• Pound sterling (GBP), 11.9% weight 
• Canadian dollar (CAD), 9.1% weight 
• Swedish krona (SEK), 4.2% weight 
• Swiss franc (CHF) 3.6% weight

From Investopedia:

The U.S. dollar index has risen and fallen sharply throughout its history, reaching its high point in February 1985 with a value of 164.72 and its low point in March 2008 with a value of 70.698. As of March 25, 2020, the index carried a value of 100.35, meaning that the U.S. dollar has depreciated versus the basket of currencies since 1985 but is roughly equal to its starting value in 1973. The index is greatly affected by macroeconomic factors, including inflation/deflation in the dollar and foreign currencies included in the comparable basket, as well as recessions and economic growth in those countries. 

The contents of the basket of currencies have only been changed once since the index started when the Euro replaced many European currencies previously in the index in 1999 such as Germany's predecessor currency, the Deutschemark. In the coming years, it is likely currencies will be replaced as the index strives to represent major U.S. trading partners. It is likely in the future that currencies such as the Chinese yuan (CNY) and Mexican peso (MXN) will supplant other currencies in the index due to China and Mexico being major trading partners with the United States.