August 8, 2007
US Trade-Weighted Dollar Index at All-Time Lows
Most of us look at the Dollar Index (DXY) closely, but it’s also important to keep an eye on the Trade-Weighted Dollar Index (USTW$).
I present two more exhibits which give further support to the long-term USD short position:
- A bill to amend the Foreign Intelligence Surveillance Act of 1978 to provide additional procedures for authorizing certain acquisitions of foreign intelligence information and for other purposes
- Executive Order: Blocking Property of Certain Persons Who Threaten Stabilization Efforts in Iraq
My poor country is going to the dogs, being destroyed from within, and the only thing we can do is protect ourselves by diversifying out of the USD. (I also encourage all my US-based readers to buy a home abroad.)
Currency Weights: Broad Index of the Foreign Exchange Value of the Dollar
Can anyone confirm that the seven countries that make up the “Major Currency” index are: Euro area, Canada, China, Mexico, Japan, United Kingdom, and Korea?
UPDATE: Thanks to commenter “jp,” we now know that the “Major Currency” countries are: Euro area, Canada, Japan, United Kingdom, Switzerland, Australia and Sweden. In light of this, I think the best trade-weighted dollar index to watch is the “Broad” one: USTWBROA (which is only updated monthly, unfortunately).
August 8th, 2007 at 6:15 pm
The single positive outcome of Bush’s disastrous, terror promoting, democracy undermining and economy threatening presidency is that the constant spin, lies, deceit and, on top of that, singular incompetence in policy execution, should severely discredit and remove from power the far right for at least the next couple of decades.
The pendulum will start to swing back in the other direction, ending this nightmare.
August 9th, 2007 at 12:13 am
From the fed website:
“Seven of the twenty-six currencies in the broad
index—the euro, Canadian dollar, Japanese yen, British
pound, Swiss franc, Australian dollar, and Swedish
krona—trade widely in currency markets outside
their respective home areas, and these currencies
(along with the U.S. dollar) are referred to by the
Board’s staff as ‘‘major’’ currencies.”
August 9th, 2007 at 1:43 am
This has been little noticed
August 9th, 2007 at 3:19 am
I cant help but think that the world will wake up one day to the realization that they have been had yet again by the same crowd who p0wned them after ww1 and ww2. Actually we’re all p0wned. Let’s start a club “Coppertops United International”.
August 9th, 2007 at 5:21 am
Markus,
I wish I was as hopeful as you are about a change in power in the US. Unfortunately, the front-running dems are not all that different than the nightmarish administration now in power. Sure, they talk a different game but in the final analysis things will be mostly the same. Just look at how the dems have rolled over and over again since the beginning of the year on the Iraq war. It’s disgraceful.
I’m not sure what will make things better politically in the US… but I have this feeling that if everyone threw their televisions out of their windows it would be a good start.
-DT
August 9th, 2007 at 6:24 am
@jp: Thanks for that … I thought that the Chinese Yuan would be considered a “major currency” but of course it isn’t freely convertible. If it were included in the USTW$, that chart would look even worse.
@moom: I did see that and I think the EU instantly retaliated by demanding the same thing of US business travelers to Europe so I don’t think it’ll last long.
August 9th, 2007 at 8:53 am
US politics is driven by money - no money no play! How different can the future be if ALL the players need money to take part - its the same pool of money they draw from. Thus you ask who calls the influence - clearly those with the money. Bush is the best example yet of mouth-piece serving the needs of others - as the rich get richer they derive more power and influence its surely common sense that they can exercise this in ever increasing circles.
August 9th, 2007 at 8:56 am
Quite a few commentators on CNBC Europe yesterday were pretty sure the end of this week would see a reversal in $ values against yen further unravelling of carry trade - not sure what’s driving their confidence given swing to the upside over the past few sessions.
August 9th, 2007 at 1:10 pm
good night Gracie
August 9th, 2007 at 5:34 pm
There is life in the old dog, yet.
Be careful, it still bites ;-)
August 9th, 2007 at 6:53 pm
DT, I agree that throwing TV’s out the window would probably be a very good start in getting people to start using their brains again as opposed to toeing the party line and merely cheering on the propaganda of the day ;-).
Looks like there are two Markuses here, I posted the first comment, but as the other Markus seems to have been here longer I’ll switch my name to MarkusP.
Cheers
August 10th, 2007 at 7:59 am
u r all cracked
please read the IBD Editorials, & sign up for the daily email
p.s. — please discuss why there’s no more need for Farm Aid today (include in the discussion the phrase “dollar denominated commodity”, or the phrase “inverse relationship”), & think about the importance of being a Red State farmer or miner
–Also, what effect the Clinton ’strong dollar policy’ had on the need for the 4 Big Oil mergers in ‘98 when Crude dropped to $10…XOM, CVX, BP, COP
August 10th, 2007 at 9:46 am
These indices are nice to look at, but I’m not sure how much value we should put in them unless they are traded.
August 10th, 2007 at 12:13 pm
Brian: The USTW$ is a weighted composite of a group of actively traded currencies, so it has as much value as if it were traded itself (which it isn’t as far as I know).
August 10th, 2007 at 4:25 pm
I know that the group of currencies is actively traded, but my concern is that these weighted indices are not. We don’t really know whether the weights assigned are correct or not because they are not priced by the market, but rather arbitrarily with ‘official’ trade numbers.
Could be useful references, but I wouldn’t use them to base trading decisions on.
August 10th, 2007 at 4:45 pm
Brian: Yes, I suppose you could say the official trade numbers are suspect which throws the weighting into doubt, but it’s the best we’ve got and certainly good enough for gubmint work.
January 9th, 2008 at 6:10 am
i hate pallites
January 9th, 2008 at 7:47 am
lisa: pallites?