Since DXY consists of five currencies: Euro 57.6%, Yen 13.6%, Sterling 11.9%, Canadian Dollar 9.1%, Swedish Krona 4.2%, Swiss Franc 3.6% and with most weight are put on the Euro (>50%), DXY seems like an indicator of how European sees USD.
Yen could represent Asian countries but the weight is only 13.6%. Therefore, DXY index can be a good indicator of fear in the Europe rather than an indicator of global fear towards US economy.
The recent better than expected signs of recovery in the US economy lifted the DXY as well as the fear of bubble in Europe.
As one can see that ever since the emergence of fear in Dubai, the DXY increases until today. There is a small drop in the middle and it was caused by the improvement of job condition in the US.
DXY shows that there is still fear in the Europe.
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