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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Pound US Dollar (GBP/USD) Exchange Rate Approaches 6-Month Low GBP to USD Pound Sterling (GBP) US Dollar (USD) Weekly Forecast
September 24 2023Pound US Dollar (GBP/USD) Exchange Rate Crashes on Central Bank Decision Week The Pound US Dollar (GBP/USD) exchange rate hit its lowest point in … read more
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Pound US Dollar (GBP/USD) Exchange Rate Languishes Near Six-Month Low following Dire PMIs GBP to USD Pound Sterling (GBP) US Dollar (USD)
September 22 2023Pound US Dollar (GBP/USD) Exchange Rate Bruised after Week of Losses (Updated 16:40, 22/09/23) The Pound US Dollar (GBP/USD) exchange rate ends the … read more
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Pound US Dollar (GBP/USD) Exchange Rate Crashes, BoE Keeps Interest Rates on Hold GBP to USD Pound Sterling (GBP) US Dollar (USD)
September 21 2023Pound US Dollar (GBP/USD) Exchange Rate Drops on Bearish UK Sentiment The Pound US Dollar (GBP/USD) exchange rate fell sharply this morning ahead of … read more
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Pound US Dollar (GBP/USD) Exchange Rate Narrows Despite Dwindling BoE Bets GBP to USD Pound Sterling (GBP) US Dollar (USD)
September 20 2023Pound US Dollar (GBP/USD) Exchange Rate Flattens as Market Mood Improves Article updated 16:05, 20/9/23: The Pound US Dollar (GBP/USD) exchange … read more
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Pound Undermined by Poor Data, US Dollar Rises on Renewed Fed Hike Bets Business News Euro (EUR) Pound Sterling (GBP) US Dollar (USD)
GBP/EUR Exchange Rate: Pound Dented as UK Outlook Deteriorates The Pound Euro (GBP/EUR) exchange rate seesawed over the past week, amid … read more
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Pound US Dollar (GBP/USD) Exchange Rate Rangebound Despite Upbeat Trade GBP to USD Pound Sterling (GBP) US Dollar (USD)
September 19 2023Pound US Dollar (GBP/USD) Exchange Rate Remains Flat as Market Mood Improves Article updated 16:15, 19/9/23: The Pound US Dollar (GBP/USD) … read more
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Pound US Dollar Weekly Forecast: GBP/USD Slips to Three-Month Lows amid Dismal UK Data GBP to USD Pound Sterling (GBP) US Dollar (USD) Weekly Forecast
September 18 2023The Pound US Dollar (GBP/USD) exchange rate sank to a three-month low last week, amid some dire UK economic releases What’s Been Happing: Pound … read more
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Pound US Dollar (GBP/USD) Exchange Rate Falls as UK Economy Contracts GBP to USD Pound Sterling (GBP) US Dollar (USD) Weekly Forecast
September 17 2023Pound US Dollar (GBP/USD) Exchange Rate Weakens on Sterling Headwinds The Pound US Dollar (GBP/USD) exchange rate trended lower over the course of … read more
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Pound US Dollar (GBP/USD) Exchange Rate Recovers from Three-Month Low amid Risk-On Mood GBP to USD Pound Sterling (GBP) US Dollar (USD)
September 15 2023Pound US Dollar (GBP/USD) Exchange Rate Rises amid Upbeat Trade The Pound US Dollar (GBP/USD) exchange rate is moving higher this morning, having … read more
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Pound US Dollar (GBP/USD) Exchange Rate Narrows as Investors Pare Back BoE Hike Bets GBP to USD Pound Sterling (GBP) US Dollar (USD)
September 14 2023Pound US Dollar (GBP/USD) Exchange Rate Wavers amid Pared Back BoE Hike Bets The Pound US Dollar (GBP/USD) exchange rate is trading without … read more