key definitions
- broad dollar index
- a trade-weighted measure of the dollar against foreign currencies — broader than DXY, which is euro-heavy.
- financial conditions
- how borrowing costs, credit availability, equity prices, and the dollar combine to tighten or ease the economy.
- transmission
- the channels through which US rates and the dollar hit global funding markets, commodity invoices, and corporate hedging.
- earnings translation
- how a stronger dollar reduces reported overseas profits when foreign sales are converted back into USD.
a falling dollar often helps commodity prices and emerging-market balance sheets funded in dollars. a rising dollar does the opposite — even before US growth changes.
US equities are not a clean 'dollar down = buy' trade. in risk-off dollar spikes, quality and mega-cap liquidity can outperform even when the dollar story is macro bearish.
early-1990s dollar softness
recession repair and lower US rates left the dollar heavy before the mid-decade stabilisation.
- dollardrifted weaker as growth reset.
- fedeased from tight early-cycle levels.
- emfinancing stress in episodic bursts.
weak dollar can buffer US multinationals while complicating inflation optics.
the broad dollar hovered in a softer band versus the late-1980s peak.
FRED DTWEXBGS (refresh)
late-1990s dollar strength
US productivity narrative and capital inflows lifted the dollar as emerging markets fractured selectively.
- dollarclimbed alongside US equity euphoria.
- commoditiesmany complexes softened into deflation talk.
- emserial crises reminded investors USD funding matters.
dollar strength plus US outperformance can crowd global liquidity into a narrow US funnel.
the broad dollar rose through the Asia–Russia–LTCM corridor before the dot-com peak.
Fed; Treasury
2001 to 2007 USD drift lower
US current account deficits and global carry trades often ran against the dollar until the financial crisis.
- dollartrended down as global growth broadened.
- commoditiessupercycle lift helped EM FX until mid-2008.
- risklow volatility encouraged reach for yield.
dollar down can mask domestic overheating if credit is the real accelerant.
the broad dollar stepped down from its late-1990s perch.
FRED
2008 to 2011 dollar spikes
flight-to-quality squeezed USD funding; dollar whipped around as policy backstops landed.
- dollarspiked into the Lehman moment.
- fedswap lines and QE capped the worst funding breaks.
- riskcorrelations went to one briefly.
dollar liquidity is the world's marginal funding cost — stress shows up there first.
the dollar surged into the crisis then oscillated through early QE.
BIS dollar funding papers
2012 to 2019 range then grind higher
QE abroad and US recovery made the dollar a relative play — grinding stronger into 2015–2019.
- dollarrose as US rates diverged from negative-yield Europe.
- earningstranslation became a headwind for multinationals.
- emselective stress — not 1998 everywhere.
mid-cycle dollar strength often collides with late-cycle earnings caution.
broad dollar strengthened on relative growth and policy divergence.
FRED
2020 to 2026 pandemic and hikes
violent risk-on/off, then aggressive fed hiking, then partial normalisation.
- dollarwhipped with real-rate and positioning.
- fedQE then fastest hikes in decades.
- fiscalhuge US deficits competed with private absorption.
when US real yields lead globally, the dollar often follows — watch TIPS and curves, not myth.
the dollar spiked into 2020 stress, eased into reopening, then firmed with rate support.
FRED; Treasury
pair dollar moves with rates and credit: the same dollar strength can be benign (US growth leadership) or toxic (global USD funding squeeze).
when maintaining this page, refresh trade-weighted series and ETF indexed revenue exposure — the transmission map shifts with supply chains.