SOURCES: IMF,SWIFT,WTO,Bank for international settlement
The US dollar is the number one currency in every respect.The US economy is the largest in the world,and although set to be overtaken by china in the next decade,remains the most important at the present.
The US dollar is reffered to as the currency of 'first reserve' simply because every bank around the world will have the largest percentage of their foreign exchange reserve held in US dollars,and the reason for these is simple.The US dollar is seen has 'safe'.
SOURCES:THE BALANCE/BAILEY MARINER
The US dollar underpin the largest economy in the world,is backed by the US federal reserve.In addition the dollar lies at the heart of the largest debt market in US bonds.Finally, all commodity are price in US dollars including oil and gold.
As a result the US dollar is classified has a 'safe heaven' currency.In other words when everybody is frightened and worried,then the US dollar is seen has a safe place to put your money,and has a result investors and speculator will run for cover to the US bond market.
SOURCES: IMF Currency Composition of Foreign Exchange Reserves, Federal Reserve
Money flow and risk go hand in hand on the fulcrum of fear and greed,or risk and return,if you like.If you are greedy and prepared to take on more risk,then you are rewarded with higher returns.If you are frightened and want low risk investment then the returns will be low.
The US dollar is therefore the ultimate barometer of risk. it is the fulcrum on which the currency markets balance,and indeed in many ways.
All you need to do to succeed has a forex trader,is to have a clear view of the US dollars.if the US dollar is going up,then the other currency will be going down,and vice versa.is really is that simple.
The important of the US dollars is further reinforced with one chart that reveals strength and weakness against severals of the major currencies and its called the US dollar index.
This is one of the single most important chart to watch.whatever the timeframe your trading,or whether your an investor or pure speculator.
SOURCE:TRADINGVIEW.COM
This one chart will tell you whether the dollar is rising or falling against those currencies around the world which are quoted against the US dollars.
The dollar index is the starting point for every forex trader,every day,and should be yours too.Understand where the US dollar is in relation to the other major currencies pairs and you then have a 'framework' against which to trade.
The US dollar set the landscape for the forex market,and the US dollar index chart display these for you quickly and easy.
