The Almighty Dollar and the Currencies that Crushed it in 2016

Jon Banking, Blogosphere, Economy, Fiscal Policies, Market Commentary

A mix of deceptive calm, hair-raising craziness, and big surprises.
Much of the strength of the dollar in 2016 has been ascribed to rising interest rates in the US and minuscule tightening by the Fed – or rather ‘removing accommodation,’ as it likes to say – even as other central banks still engage in QE and negative interest rate absurdities. So the US became a destination for the hot money. By December 20, the dollar reached the highest point since December 2002 against the basket of currencies in the Dollar Index, though it has since eased off somewhat since then.
But the Dollar Index contains only six currencies: euro, yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc. It doesn’t even include the currencies of two of the four largest US trading partners, Mexico and China.
So how has a broader range of currencies fared against the dollar? Turns out, some soared, others plunged.

This post was published at Wolf Street by Wolf Richter ‘ Jan 1, 2017.