Gyroscopic Investing

https://www.investing.com/indices/usdollar

I know there are lots of fears around the dollar losing reserve status and losing it's purchasing power.

The DXY index has dollar up over 10% over the last year.

Does anyone think this is no longer an accurate measurement?

Where is capital flowing if not to the dollar?

Maybe not enough weight to China?

https://www.tradingpedia.com/day-tradin ... 20negative).


The U.S. dollar index is calculated via the following formula: USDX = 50.14348112 × EURUSD^-0.576 × USDJPY^0.136 × GBPUSD^-0.119 × USDCAD^0.091 × USDSEK^0.042 × USDCHF^0.036 (note that when the US dollar is not the base value in the currency cross, the value is negative).

whatchamacallit wrote: ↑Fri Apr 22, 2022 10:06 am https://www.investing.com/indices/usdollar

I know there are lots of fears around the dollar losing reserve status and losing it's purchasing power.

The DXY index has dollar up over 10% over the last year.

Does anyone think this is no longer an accurate measurement?

Where is capital flowing if not to the dollar?

Maybe not enough weight to China?

https://www.tradingpedia.com/day-tradin ... 20negative).


The U.S. dollar index is calculated via the following formula: USDX = 50.14348112 × EURUSD^-0.576 × USDJPY^0.136 × GBPUSD^-0.119 × USDCAD^0.091 × USDSEK^0.042 × USDCHF^0.036 (note that when the US dollar is not the base value in the currency cross, the value is negative).

Everyone knows that a 10% increase in the dollars vs. a basket of foreign currencies means it is losing its status as a reserve currency.

Just go to another thread, it's all there to be understood.

Or something way more simple and what is actually going on...the US dollar now has a higher interest rate than most non-trash currencies and for the first time in a very long time a higher interest rate than the RMB. All currencies are manipulated by their governments to a degree and the primary above board way that is done is via overnight bank rates that are in today's world clearly communicated and generally well in advance of the move. Additionally, the monetary policy change should be consistent with the basic underlying economic conditions. Large institutions do not like the unpredictability of artificially manipulated currencies for non-economic or unsound free market economic reasons. If they can't make or lose money in a game whose rules are understood they just aren't going to play the game. Currencies managed primarily for other reasons are arbitrary and folks making multi-billion dollars bets do not like arbitrary.

And that my friends is the real and not too complicated reasons why the dollar is gaining strength and why totalitarian currencies do not gain traction. Until there is an economy that is as large as ours and manages their currency according to free market principles as the main force the USD isn't going down in stature. If US interest go down relative to other currencies...guess what? The dollar is going to head the other direction.

Between doom and gloom pre-set world views and basic economics I know where my money is going every time.

Dxy up 12.59% in last year now.

My understanding of what I have heard is all the dollar denominated debt is needing to be paid off.

That causes the demand for the dollars and selling of everything else to get the dollars.

The would include the selling of long bonds making rates go up there even though the dollar is still desired

whatchamacallit wrote: ↑Tue Apr 26, 2022 3:11 pm Dxy up 12.59% in last year now.

My understanding of what I have heard is all the dollar denominated debt is needing to be paid off.

That causes the demand for the dollars and selling of everything else to get the dollars.

The would include the selling of long bonds making rates go up there even though the dollar is still desired

I've heard it described like this. All the currencies of the world are like a ship with the reserve currency being at the highest point. When the entire ship starts sinking everyone scrambles to the highest point. At a micro level it looks like the currency is going up. At the macro level it is a signal that the entire ship is sinking. I believe this is Brent Johnson's Dollar Milkshake Theory.

ppnewbie wrote: ↑Tue May 24, 2022 5:00 pm Brent Johnson's Dollar Milkshake Theory.

I know nothing about the theory but its name and my bones tell me it must be true.

whatchamacallit wrote: ↑Tue Apr 26, 2022 3:11 pm Dxy up 12.59% in last year now.

My understanding of what I have heard is all the dollar denominated debt is needing to be paid off.

And/or we have a compelling rate if you want to purchase our debt compared to most other non-junk countries.

1 dollar is worth 1 euro today.

https://fortune.com/2022/07/08/euro-dol ... over-time/

Euro lost 20% to dollar over last 14 months

I came across this insight from 2020 describing the dollar shortage that we appear to be living through now.

https://www.dlacalle.com/en/despite-mas ... more-10668