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.

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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


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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