US Dollar (USD)
The US Dollar (USD) is the de facto world currency. Global commodities are priced in USD, most central banks’ foreign reserves are held in USD, and it’s the most-traded currency on the forex market.
Key Info
Currency code: USD
Currency symbol: $ (Dollars), ¢ (cents)
Nickname: The ‘Greenback’
Affiliated central bank: Federal Reserve
Key currency pairings: EUR/USD, GBP/USD, AUD/USD
Denominations:
Coins: 1¢, 5¢, 10¢, 25¢, 50¢
Notes: $1, $5, $10, $20, $50, $100
Where is the US Dollar Used?
Apart from being used on the global commodities market, the US Dollar is the official currency of many nations in the Americas, including Panama, Ecuador, El Salvador, the British Virgin Islands, the Turks and Caicos Islands, and the Caribbean Netherlands. The five US territories – Puerto Rico, the US Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa – also use USD.
East Timor in Southeast Asia and some Pacific islands officially use the ‘Greenback’, while it’s also legal tender in Cambodia and Zimbabwe. In addition, over 65 countries peg their currencies to the US Dollar.
What Affects USD Exchange Rates?
There are a number of factors that influence the US Dollar, and sometimes these factors overlap to produce counterintuitive results.
However, generally speaking, three key things affect USD exchange rates.
Risk Appetite
As the de facto global currency, the US Dollar is what’s known as a safe-haven asset. This means that it’s considered a safe and stable investment, so it tends to appreciate in value when market sentiment sours, such as during an economic downturn, uncertainty, or geopolitical tensions.
If there’s a risk-off mood – i.e. if investors are worried, anxious or uncertain – investment tends to flow from riskier assets to safer assets, such as the safe-haven US Dollar. If global markets are feeling optimistic and are willing to risk more in return for potentially higher yields, the US Dollar often depreciates.
Federal Reserve
The Fed is the US central bank, and members of the Federal Open Market Committee (FOMC) meet eight times a year – usually around seven weeks apart – to set monetary policy, including interest rates. Higher interest rates tend to support the relevant currency, so if the Fed hikes then USD often climbs.
Markets try to ‘price in’ policy decisions before they happen, meaning the value of the Dollar can fluctuate depending on what investors think the Fed will do. As such, comments from FOMC policymakers can impact USD.
US Economic News
Finally, data and news about the US economy can be a big factor in USD exchange rates. While positive economic news generally supports the ‘Greenback’, it is sometimes more complicated than that.
Because America is the world’s largest economy, strong US data can trigger a risk-on mood in global markets, which can thereby dent the safe-haven US Dollar. On the other hand, strong economic data may spur the Fed to raise interest rates, which could boost the US Dollar.
Latest US Dollar News
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FX newsflash: US inflation could add to market volatility Economy News US Dollar (USD)
April 8 2025The US will publish its latest consumer price index on Thursday, with the release potentially injecting further volatility into currency markets … read more
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Fed and BoE decisions to drive volatility in USD and GBP? Business News Economy News Pound Sterling (GBP) US Dollar (USD)
March 18 2025Both the Federal Reserve and the Bank of England (BoE) meet to set monetary policy this week, with the central banks’ forward guidance potentially … read more
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Fed and ECB interest rate decisions to see USD soar and EUR slump? Economy News Euro (EUR) US Dollar (USD) Weekly Forecast
January 28 2025This week, both the Federal Reserve and the European Central Bank (ECB) will announce their latest interest rate decisions A hawkish hold from the … read more
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US dollar slumps as Trump’s first days rock currency market Economy News US Dollar (USD)
January 24 2025(Updated 13:00, 24/01/25) The US dollar (USD) has suffered notable losses this week, with Donald Trump’s early days in office proving negative for … read more
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Non-farm payrolls to drive US dollar volatility? Business News Economy News US Dollar (USD) Weekly Forecast
January 7 2025The latest US non-farm payrolls figure will be published on Friday, with the data potentially driving volatility in the US dollar At the time of … read more
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Pound slides as Bank of England holds interest rates in 6-3 split decision Economy News Pound Sterling (GBP) US Dollar (USD)
December 19 2024(Updated 14:50, 19/12/2024) The Bank of England (BoE) left interest rates unchanged on Thursday as it announced its final policy decision of … read more
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FX newsflash: Federal Reserve and Bank of England decisions to drive volatility? Business News Economy News Pound Sterling (GBP) US Dollar (USD)
December 17 2024This week, both the Federal Reserve and the Bank of England (BoE) will announce their final interest rate decisions of 2024, with the outcomes likely … read more
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Pound US dollar (GBP/USD) exchange rate slips amid souring market mood GBP to USD Pound Sterling (GBP) US Dollar (USD)
November 8 2024Pound US dollar (GBP/USD) exchange rate softens amid risk-off trade (Updated 15:40, 08/11/24) The pound US dollar (GBP/USD) exchange rate slipped … read more
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Pound US dollar (GBP/USD) exchange rate strengthens ahead of central bank interest rate decisions GBP to USD Pound Sterling (GBP) US Dollar (USD)
November 7 2024Pound US dollar (GBP/USD) exchange rate climbs amid risk-on flows The pound US dollar (GBP/USD) exchange rate is gaining ground this morning as an … read more
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Pound US dollar (GBP/USD) exchange rate plunges to three-month low as Trump races to victory GBP to USD Pound Sterling (GBP) US Dollar (USD)
November 6 2024Pound US dollar (GBP/USD) exchange rate in freefall amid US election The pound US dollar (GBP/USD) exchange rate has collapsed this morning amid the … read more