Thanks to the prospect of more quantitative easing (money printing) from the Federal Reserve, and the Eurozone’s apparent stabilisation, the U.S. dollar has become a global whipping boy once again. Gold and many currencies such as the euro are soaring against it.
Yet despite all the dollar-bashing, the dollar hasn’t actually done that badly year-to-date.
The Dollar Index, which represents the dollar’s value vs. a basket of world currencies, was up 3.3% for the year as of yesterday according to Bespoke Investment Group, beating the stock market’s S&P 500 index, as shown below. This is pretty impressive given that the Federal Reserve’s easy-money policies place downward pressure on the dollar via low interest rates and growing money supply, while providing upward pressure for stocks via low interest rates earned on cash or bonds.
Gold, however, has trumped both so far (not shown).