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The dollar rose and a gauge of global equities slid on Thursday after data once again highlighted persistent U.S. labor market strength, suggesting the...
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The impact of the US dollar on foreign exchange

Gold Investment Foreign Exchange News, the US dollar is no stranger to friends who speculate in foreign exchange, butnot all investors are clear about the impact of the US dollar trend on foreign exchange. Then, let’s understand the impact of the US dollar plus on foreign exchange:

The impact of USD plus on foreign exchange:

Since the United States has a very strong and independent central bank , monetary decisions have a key impact on the overall performance of its economy, so every regular interest rate adjustment meeting of the Federal Reserve will have a more or less impact on the foreign exchange market. Since interest rates directly affect the level of fixed income of foreign currency deposits, the strength of the US dollar index is greatly affected by interest rate adjustments.

In the past era of fixed currency returns, the higher the deposit interest rate of a country’s currency, the more international funds would be attracted for arbitrage and the exchange rate would have strengthened. It is not conducive to the overall performance of the stock market, but instead makes the international funds repatriate from countries that adopt tight monetary policies , and the exchange rate also weakens. The direction of interest rates depends on the above-mentioned overall economic factors, such as inflation rate , foreign exchange margin money supply growth rate, economic growth rate, central bank policy, etc. Therefore, the market’s expectations for the future level of US interest rates will affect the price of the US dollar index.