Is the dollar's valuation too high? This is a matter of opinion
The market is increasingly skeptical about pushing the dollar against other currencies earlier this year. At least one indicator appears to show that the dollar may have peaked.
The Federal Reserve Economic Data (FRED) index, which measures the US dollar against the 26-currency exchange rate on a trade-weighted basis, showed that the dollar rose to its high since the end of 2016, followed by a decline in the US market and a rise in the euro And fell.
The inflation-adjusted FRED overall index showed that the dollar hit a peak of 128.79 at the end of December last year, less than 1% from February 2002 and the high of 129.87.
However, as shown in the figure (reut.rs/2nhaq16), when the inflation adjustment, the index shows the dollar rose in December reached nearly 9% of the peak, still less than the beginning of this century high.
Trump, after winning the presidential election last year, rose to a four-year high, as the expected tax adjustment could bring billions of dollars back to the US to allow the White House to expand spending, boost growth, inflation and interest rates.
This view gradually faded at the beginning of the year earlier this year, and the dollar fell across the board against all other major currencies, falling further after the Fed raised interest rates this month but released the dove's remarks. The Fed raised interest rates this month, but hinted that this year's rate hike will be less than some market participants expected.
"The real exchange rate tends to return to the mean, taking into account the dollar's current price is higher than the expected price after 2.5 years, the dollar is now significantly overestimated," hedge fund Harmonic Capital Partners investment director Patrik S?fvenblad said in a customer report.
So, in the end which to believe which indicators?
The Federal Reserve Economic Data (FRED) index, which measures the US dollar against the 26-currency exchange rate on a trade-weighted basis, showed that the dollar rose to its high since the end of 2016, followed by a decline in the US market and a rise in the euro And fell.
The inflation-adjusted FRED overall index showed that the dollar hit a peak of 128.79 at the end of December last year, less than 1% from February 2002 and the high of 129.87.
However, as shown in the figure (reut.rs/2nhaq16), when the inflation adjustment, the index shows the dollar rose in December reached nearly 9% of the peak, still less than the beginning of this century high.
Trump, after winning the presidential election last year, rose to a four-year high, as the expected tax adjustment could bring billions of dollars back to the US to allow the White House to expand spending, boost growth, inflation and interest rates.
This view gradually faded at the beginning of the year earlier this year, and the dollar fell across the board against all other major currencies, falling further after the Fed raised interest rates this month but released the dove's remarks. The Fed raised interest rates this month, but hinted that this year's rate hike will be less than some market participants expected.
"The real exchange rate tends to return to the mean, taking into account the dollar's current price is higher than the expected price after 2.5 years, the dollar is now significantly overestimated," hedge fund Harmonic Capital Partners investment director Patrik S?fvenblad said in a customer report.
So, in the end which to believe which indicators?