U.S. Dollar Down 3.1% since Start of 2018; 13.4% Year-over-Year
The U.S. dollar had momentum in the first half of 2017, but it’s been all downhill since then. In fact, the U.S. dollar is off to its worst start in 21 years and it looks like it could get worse.
The U.S. dollar Index, which measures the U.S. dollar against a basket of foreign currencies, is at $0.8904 and has fallen roughly 3.1% since the start of 2018. Since the start of January, the Pound Sterling has advanced 5.2% against the greenback and the Euro-to-Dollar rate is up 4.2%. Even the Canadian dollar has strengthened compared to the U.S. dollar, up 1.4%.
On January 20, 2017, the day Donald Trump entered the Oval Office, the U.S. dollar index was at $101.19; since that day, the greenback has cratered 12.6%. By comparison, since January 20, 2017, the Pound Sterling has advanced 14.6% while the Euro-to-Dollar rate has soared 18.0%. The Loonie has been on a bit of a rollercoaster since Trump ascended into the White House, but it’s still up 7.3% since January 20, 2017.
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has been warning for months that the U.S. dollar would continue to fall. Why? The U.S. economy is chugging along, unemployment is at its lowest levels in 17 years, and the U.S. economy made room for 200,000 jobs in January, versus a forecasted 180,000.1
But concerns about Trump’s economic policies are outweighing solid economic news on the home front. For example, President Trump recently imposed a massive 30% tariff on imported solar panels and washing machines. The tariffs are mostly meant to hurt China that has been sending in cheaper solar products for years.
Not only are there concerns that these tariffs could result in the loss of 90,000 jobs, it will make solar panels and washing machines much more expensive for the average cash-strapped American; the very people who sent Trump to the White House. It could also lead to a trade war with China, the intended target of the tariffs.2
On top of that, continued political discord in Washington, concerns about Russia’s meddling in the U.S. election, and the Federal Reserve’s monetary policies could trigger additional losses for the U.S. dollar.
Outside the U.S., the greenback is falling because the global economy is strengthening. In 2017, the Eurozone, the world’s largest economic region, had one of its best years economically in a decade. In the U.K., the economy is doing better than expected.
Even the stock market is pointing to additional losses for the U.S. dollar. Keep in mind, investors flock to the U.S. dollar when stocks start to sell off. That’s because the greenback is seen as an economic safe haven; it is, after all, attached to the strongest economy in the world. But despite the selloff of stocks in early February, the U.S. dollar continues to hover near multi-year lows.
This has many income starved investors wondering if there are better places to park their money.
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The U.S. economy is churning out solid economic data, but that doesn’t necessarily translate into a stronger U.S. dollar. In fact, in spite of decent economic conditions, the U.S. dollar continues to fall. And there are a lot of economic indicators that suggest the greenback has further to fall before it rebounds. This opens a world of possibilities for currency traders. Especially those enrolled with Learn-To-Trade.com
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- “Employment Situation Summary, January 2018,” Bureau of Labor Statistics, February 2, 2018; https://www.bls.gov/news.release/empsit.nr0.htm
- “Solar Energy Advocates from Manufacturers to Installers Testify in Washington Against Trade Petition,” Solar Energy Industries Association, October 3, 2017; https://www.seia.org/news/solar-energy-advocates-manufacturers-installers-testify-washington-against-trade-petition
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