USD Is It Going Up Or Down

Is USD Going Up Or Down?

No matter the reason you’re asking about the USD performance, chances are, you’ll want to see if the Australian Dollar has a chance to beat the market. But before we consider the Australian Dollar index, we must first look at the US Dollar.

USD Going Up Or Down

Quite a few asset classes have seen a miserable return throughout 2022, that is, apart from the United States Dollar. This dollar has strengthened quite a bit, due to the Federal Reserve bank hiking interest rates in an effort to soften the skyrocketing rates of inflation. The US Dollar index is up about 17% this year, so far. Additionally, the United States Dollar appears even stronger when it is compared to the bad performance of cryptocurrencies, stocks, real estate, and bonds. It is also currently the most traded currency, beating other currencies like the Spanish Dollar and the British Pound.

For reference, a strong dollar refers to the value of dollars that is compared to another currency. The US Dollar has strengthened due to the Fed adopting a monetary policy stance, lifting federal funds rates from nearly zero to about 3.75 – 4%. All this has occurred from the beginning of 2022 to November. Most observers of the market expect at least one percentage point increase when 2023 hits.

So, how strong is the US Dollar? To put it in perspective, one Euro would be the equivalent of $0.98 USD today while last year, it would equal 1.16 USD. From a different viewpoint, one US Dollar would equal 148 Japanese Yen now, however, last year it was equal only to 114 Yen. Please ensure to check the exchange rates regularly if you are looking to exchange currency, as these exchange rates change frequently. As you can see, the US Dollar and its exchange rate continue to steadily rise, while global growth slows.

Australian exchange rates for the United States Dollar

USD traded currency

Currently, one AUD is worth 0.67 USD. USD is nearly twice as strong as AUD, partly due to the Reserve Bank of Australia slowing the pace of its interest rates.

Inflation has also had its role to play. The Reserve Bank of Australia’s monetary policy has been under substantial pressure after China’s economic growth slowed. Additionally, China’s demand for Australia’s commodities has softened, meaning that commodity prices have fallen from their comfortable position in March. So, what is the history of AUD and USD performance?

During the onset of Covid-19, investors switched to ‘safe’ investments as they held concerns about the country’s commodity prices and exports. The last time AUD and USD traded currency at such a low level was during 2001-2002, according to the AUD to USD chart.

Later on, the AUD exchange rates recovered and were resilient despite the trade tensions with China. Eventually, China banned Australian coal and the forex pair gained more than 9% in 2020. During the start of 2021, the AUD and USD exchange rates were quite strong, hitting 0.8 intraday on the 25th of February 2021. However, its gains and exchange rate plummeted for the rest of the year, with the currency pair losing around 5.6% throughout 2021.

What’s in store for the US Dollar in 2023?

Store for the US Dollar in 2023

This year, the USD has found itself soaring. The US Dollar index, measuring the USD performance against weighted baskets of peer currencies, has risen to levels that were last seen during 2002 May. As the global growth outlook has become quite unstable over the last few months, the United States held quite a large advantage over the other major currencies and economies. It would be no surprise if the dollar continued to grow in the upcoming months. However, the Federal Reserve system implements a cycle of monetary tightening in order to contain inflation. The US Central Bank also plays a big role here, as the name suggests, being tasked to help control the US economy. Understandably, this prompts questions on what this means for the United States Dollar. Before continuing to read, please be advised that the dollar forecast is unreliable and changes frequently. Be sure to carefully exchange currency, and not rely on the currency forecast.

Dollar Rate

As pressure continues to build, economies around the world will see their currencies lose value against the United States Dollar, as the United States Dollar shows hiking rates and may raise interest rates. The likelihood of a global recession will also rise. It may come as no surprise that the US is expected to perform better than most of its economic peers. However, despite such information, not all are convinced that the USD will continue to perform so well. The US may fall into recession next year and, in response, the Fed may cut interest rates, according to some analysts expectations.

As you can see, the United States Currency is quite unpredictable, and while it seems to be going up right now, it may not be the case in the future. Be sure to keep an eye out on the exchange rate, especially if you plan to exchange or send money, and be sure not to heavily rely on the dollar forecast in the future. Conducting your own research to get a better grip on the situation can also help, no matter what currencies you need to exchange for.