Logical Analysis Report

Key Focus

  • In addition, a majority of cross-border financing and international trade are conducted in dollars.
    Stephen Roach, Yale University senior fellow and former Morgan Stanley Asia chairman, has a warning for U.S. The prominent economist says that the era of the U.S. buck may be coming to an end and is forecasting a 35% decline soon in the U.S. currency against its major rivals, citing increases in the nation's deficit and dwindling savings.
    The lecturer said during CNBC's "Trading Nation" on Monday that the rise of China and the decoupling of the U.S. from its trade partners is setting the stage for a dramatic weakening of the U.S. currency in the next few years that is likely to end the supremacy of the monetary unit as the world's reserve currency.
    "The dollar is going to fall very, very sharply," he told the business network.
    Roach's comments follow similarly themed op-ed that he wrote in Bloomberg last week, in which he specifically declared that the "era of the U.S. dollar's 'exorbitant privilege'as the world's primary reserve currency is coming to an end.
    In that article, the economist said that the U.S. economy is already "stressed" by the impact of the COVID-19 pandemic, and suggested that the recession that has gripped the U.S. in February amid the public health crisis will only amplify the dollar's woes.
    The finance expert said that the rest of the "world is having serious doubts about the once widely accepted presumption of American exceptionalism."
    On Monday, Roach said that the U.S.'s fiscal deficit, as the government expends trillions of dollars, in an effort to mitigate the harm from COVID-19, may only make matters worse for bucks.
    Meanwhile, Roach says that China's currency, the yuan USDCNY, USDCNH, -0.01%, may garner increasing appeal from investors, as Beijing goes through a phase of structural reforms that could shift the country's manufacturing-heavy economy to one focused more on services and one with greater consumer-led growth.
    Roach makes the case that although a weaker dollar, sometimes favored by President Donald Trump, would benefit U.S. exports in the short term, it would prove more problematic over the longer term.
    One measure of the buck, the ICE U.S. Dollar Index DXY, -0.36%, has been weakening over the past 30 days, down 3.9% but is up slightly on the year, rising 0.1%, according to FactSet data.
    The index measures the buck against a basket of six rival currencies, including the euro EURUSD, +0.00%, the pound GBPUSD, -0.00% and the yen USDJPY, -0.12%.
    A weaker dollar has implications for assets and the stock market, including the Dow Jones Industrial Average DJIA, -0.68% and S&P 500 index SPX, -0.61%, with most debts denominated in dollars
  • In the past, he has said that China's yuan USDCNY, CNHUSD, 0.01 may be viewed as increasingly appealing to investors, but that view is contingent on China following through with structural reforms the country is undergoing from a manufacturing-heavy economy to one focused more on services.
    One measure of the buck, the ICE U.S. Dollar Index DXY, -0.36%, has been weakening over the past 30 days, down 2.9%, but is up slightly on the year, rising 0.7%, according to FactSet data.
    The index measures the buck against a basket of six rival currencies, including the euro EURUSD, +0.00%, the pound GBPUSD, -0.00% and the yen USDJPY, -0.12%.
    A weaker dollar has implications for assets and the stock market, including the Dow Jones Industrial Average DJIA, -0.68% and S&P 500 index SPX, -0.61%, with most debts denominated in dollars
  • Since 2000, coinciding approximately with China's joining of the World Trade Organization, the correlation has been -0.35, Schulze said.
    Meanwhile, the important thing to remember is that any currency's performance reflects what market participants think of the prospects of a particular economy versus others.
    "A weaker dollar doesn't necessarily reflect a weak U.S. economy but reflects a stronger global economy on a relative basis," Schulze told MarketWatch in an interview
  • However, stocks have done just fine during recent dollar bull markets, which have reflected the strength of the U.S. economy relative to the rest of the world.
    And a weaker dollar isn't necessarily good for stocks if it reflects big problems on the domestic front.
    This past week, the dollar and equities both lost ground, with the currency failing to get much of a safe-haven lift from a flare-up in U.S.-China tensions


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High Level Topics

  • DOLLAR
  • ECONOMY
  • WEAKER
  • GLOBAL
  • High Level Abstractions

  • DOLLAR(11, 0 Order)
  • ( DOLLAR )(11, 0 Order)  top
  • ( DOLLAR, WEAKER )(6, 1st Order)  top
  • ( DOLLAR, WEAKER, ECONOMY )(4, 2nd Order)  top
  • ( DOLLAR, WEAKER, DOLLARS )(2, 2nd Order)  top
  • ( DOLLAR, WEAKER, CHINA )(3, 2nd Order)  top
  • ( DOLLAR, WEAKER, STOCK )(3, 2nd Order)  top
  • ( DOLLAR, WEAKER, SPX )(3, 2nd Order)  top
  • ( DOLLAR, WEAKER, INVESTORS )(3, 2nd Order)  top
  • ( DOLLAR, WEAKER, ICE_U )(3, 2nd Order)  top
  • ( DOLLAR, WEAKER, YEN )(2, 2nd Order)  top
  • ( DOLLAR, WEAKER, USDCNY )(2, 2nd Order)  top
  • ( DOLLAR, WEAKER, TRADE )(1, 2nd Order)  top
  • ( DOLLAR, WEAKER, SERVICES )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY )(6, 1st Order)  top
  • ( DOLLAR, ECONOMY, CHINA )(3, 2nd Order)  top
  • ( DOLLAR, ECONOMY, DOLLARS )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY, ROACH )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY, ECONOMIST )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY, YEN )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY, WARNING )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY, USDCNY )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY, TRADE )(1, 2nd Order)  top
  • ( DOLLAR, ECONOMY, STOCK )(2, 2nd Order)  top
  • ( DOLLAR, ECONOMY, SPX )(2, 2nd Order)  top
  • ( DOLLAR, DOLLARS )(3, 1st Order)  top
  • ( DOLLAR, DEFICIT )(2, 1st Order)  top
  • ( DOLLAR, CHINA )(3, 1st Order)  top
  • ( DOLLAR, ROACH )(3, 1st Order)  top
  • ( DOLLAR, INVESTORS )(5, 1st Order)  top
  • ( DOLLAR, INVESTORS, DOLLARS )(3, 2nd Order)  top
  • ( DOLLAR, INVESTORS, CHINA )(2, 2nd Order)  top
  • ( DOLLAR, INVESTORS, ROACH )(2, 2nd Order)  top
  • ( DOLLAR, INVESTORS, EURO )(4, 2nd Order)  top
  • ( DOLLAR, INVESTORS, ECONOMY )(3, 2nd Order)  top
  • ( DOLLAR, INVESTORS, YEN )(2, 2nd Order)  top
  • ( DOLLAR, INVESTORS, USDCNY )(2, 2nd Order)  top
  • ( DOLLAR, INVESTORS, TRADE )(1, 2nd Order)  top
  • ( DOLLAR, INVESTORS, STOCK )(2, 2nd Order)  top
  • ( DOLLAR, INVESTORS, SPX )(2, 2nd Order)  top
  • ( DOLLAR, STOCK )(3, 1st Order)  top
  • ( DOLLAR, SPX )(3, 1st Order)  top
  • ( DOLLAR, SAVINGS )(2, 1st Order)  top
  • ( DOLLAR, ICE_U )(3, 1st Order)  top
  • ( DOLLAR, EURO )(5, 1st Order)  top
  • ( DOLLAR, EURO, DOLLARS )(3, 2nd Order)  top
  • ( DOLLAR, EURO, CHINA )(2, 2nd Order)  top
  • ( DOLLAR, EURO, WEAKER )(2, 2nd Order)  top
  • ( DOLLAR, EURO, ROACH )(2, 2nd Order)  top
  • ( DOLLAR, EURO, ECONOMY )(3, 2nd Order)  top
  • ( DOLLAR, EURO, YEN )(2, 2nd Order)  top
  • ( DOLLAR, EURO, USDCNY )(2, 2nd Order)  top
  • ( DOLLAR, EURO, TRADE )(2, 2nd Order)  top
  • ( DOLLAR, EURO, STOCK )(2, 2nd Order)  top
  • ( DOLLAR, EURO, SPX )(2, 2nd Order)  top
  • ECONOMY(8, 0 Order)
  • ( ECONOMY )(8, 0 Order)  top
  • ( ECONOMY, DOLLARS )(3, 1st Order)  top
  • ( ECONOMY, CHINA )(3, 1st Order)  top
  • ( ECONOMY, WEAKER )(4, 1st Order)  top
  • ( ECONOMY, ROACH )(3, 1st Order)  top
  • ( ECONOMY, TRADE )(2, 1st Order)  top
  • ( ECONOMY, GLOBAL )(4, 1st Order)  top
  • ( ECONOMY, ECONOMIST )(2, 1st Order)  top
  • ( ECONOMY, YEN )(2, 1st Order)  top
  • ( ECONOMY, WARNING )(2, 1st Order)  top
  • ( ECONOMY, USDCNY )(2, 1st Order)  top
  • ( ECONOMY, STOCK )(2, 1st Order)  top
  • WEAKER(6, 0 Order)
  • ( WEAKER )(6, 0 Order)  top
  • ( WEAKER, CHINA )(3, 1st Order)  top
  • ( WEAKER, DOLLARS )(2, 1st Order)  top
  • ( WEAKER, STOCK )(3, 1st Order)  top
  • ( WEAKER, SPX )(3, 1st Order)  top
  • ( WEAKER, INVESTORS )(3, 1st Order)  top
  • ( WEAKER, ICE_U )(3, 1st Order)  top
  • ( WEAKER, YEN )(2, 1st Order)  top
  • ( WEAKER, USDCNY )(2, 1st Order)  top
  • ( WEAKER, TRADE )(1, 1st Order)  top
  • ( WEAKER, SERVICES )(2, 1st Order)  top
  • GLOBAL(4, 0 Order)
  • ( GLOBAL )(4, 0 Order)  top
  • References