As another news leak out of Washington sullies the “Make America Great Again” sentiment that emerged in the wake of November’s election, by at least one measure, the US Dollar has given up all of its post-election gains.  There are a number of ways to measure broad-based dollar strength (or weakness), but two of the most popular are the US Dollar Index and the Bloomberg US Dollar Index.  First, the US Dollar Index is a weighted average of the dollar’s value relative to a basket of six different currencies (Euro, Japanese Yen, Pound sterling, Canadian dollar, Swedish krona, and Swiss franc).  This index is traded on the IntercontinentalExchange and is often the most widely cited index of dollar strength.  One of the shortcomings of this index, however, is that it hasn’t been re-balanced in years and has, therefore, become less representative of flows between the US and its major trading partners.  The second and more representative representation of the dollar’s strength is the Bloomberg Dollar Index.  Unlike the US Dollar Index, which hasn’t been rebalanced in years, this index rebalances every year and includes a more diverse basket of ten different currencies.  While the indices are different, they will always move in the same direction.

Looking at the performance of both indices over the last year shows a similar pattern.  In both cases, the dollar surged when Trump emerged victorious in November with a quick rally of over 5%.  Since then, though, both have drifted lower, and after three weak days in a row, they’re at new post-election lows.  In the case of the US Dollar Index, it has now given up all of its post-election gains.

Bloombereg US Dollar Index 051717

US Dollar Index 051717

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