Issue 18 – Addendum To Last Week Commentary – The Mighty Dollar

The DXY Index, a measure of the value of the U.S. dollar relative to a basket of foreign currencies, touched 103.68 on Thursday, up 15% from a year ago. The U.S. dollar hasn’t been this strong in 20 years as investors can’t seem to shake off the appeal of an international reserve and global transactional currency the nominal yields of which are the highest in the developed world. And this is happening as the cost of food and energy prices has risen to record levels. This overall weight is having a toll on the dollar value of the world money supply (WMS). MacroStrategy Partnership has calculated that the WMS has fallen USD 2.536 trillion over the past three months for an annualized decrease of 6.5%, as economies and financial markets have adjusted to a fast-changing monetary environment. Indeed, it is probable that this situation could last. The U.S. economy registered an enormous trade deficit in the first quarter of 2022, which wiped out growth. Yet official reserves in foreign countries decreased, suggesting strongly that the U.S. is attracting huge amounts of private capital from the rest of the world. A Reuters poll of over 500 economists expects the global economy to grow more slowly than predicted 3 months ago, but no recession.


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By Hubert Marleau

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By Hubert Marleau

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