The U.S. Dollar is set to close 2017 at the lows for the year as the central banks in the rest of the world begin to catch up with the rate policy of the Federal Reserve.
Among the majors the U.S. currency has been essentially falling all year against the euro, the sterling, the Canadian Dollar and in the Dollar Index (DXY).
It's high point versus the euro came on the second day of trading at 1.0339. To Friday's 1 pm rate of 1.2020 the greenback has lost 16.25 percent. Similar devaluation has taken place against the Canadian Dollar 8.8 percent (May 5th 1.3746), the British Pound 12.9 percent (January 16th, 1.1979). The DXY reached its high on January 3rd at 103.82. To date it has fallen 11.2 percent.
The European currencies are benefittng from the recovery in the continental economies, the apparent collaspe of the separtist movement in Catalonia and the burgeoning normality of Brexit. But the most important change has been the market recogination that the next policy change from the European Cental Bank will be to end its purchase program, effectively tightening interest rates more than two years after the Federal Reserve began in December 2015.
The chief exceptions to the dollar's directional movement are the Asian currencies.
The Australian Dollar has gained 6.6 percent from its January 3rd 0.7160 low. The Japanese Yen is 5 percent ahead of its January 3rd low of 118.60 percent. The New Zealand Dollar is 4.6 percent higher, its low came just last month at 0.6779 on the 17th.
But all three currencies were considerably higher against the dollar at mid-year. The kiwi peaked at 0.7558 on July 27th which at that point was 10.8 percent above its May 11th bottom at 0.6816. This high for the aussie was on September 8th at 0.8124, 13.5 percent above the January 2nd low. The yen topped out at 107.31 on September 8th, 9.5 percent over is January low.
Chief Market Strategist
WorldWideMarkets Online Trading
Fed Funds Rate Target Mid-Rate