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 Exchange Rate News: GBP/USD Tumbles as Greenback Accrues Risk-Off Support GBP to USD US Dollar (USD) Weekly Forecast
May 28 2023Pound US Dollar (GBP/USD) Exchange Rate Falls on Debt Ceiling Crisis The Pound US Dollar (GBP/USD) exchange rate weakened last week as a risk-off … read more
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Pound US Dollar (GBP/USD) Exchange Rate Rises from Eight-Week Low amid Cautious Optimism GBP to USD Pound Sterling (GBP) US Dollar (USD)
May 25 2023Pound US Dollar (GBP/USD) Exchange Rate Crawls Higher as Market Mood Improves (Updated 09:30, 26/05/23) The Pound US Dollar (GBP/USD) exchange rate … read more
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Pound Wavers as UK Core Inflation Climbs to 31-Year High Australian Dollar (AUD) Daily Update Euro (EUR) Pound Sterling (GBP) US Dollar (USD)
Pound (GBP) Spikes on Shock Core CPI Jump The Pound (GBP) found fleeting gains yesterday, following the latest consumer price index data which … read more
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Pound US Dollar (GBP/USD) Exchange Rate Narrows amid Mixed FOMC Minutes GBP to USD Pound Sterling (GBP) US Dollar (USD)
May 24 2023Pound US Dollar (GBP/USD) Exchange Rate Narrows amid Mixed FOMC Minutes (Article updated 09:10, 25/5/23) The Pound US Dollar (GBP/USD) exchange … read more
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Pound Rebounds on Shock Core CPI Jump, US Dollar Wavers amid Mixed Fed Signals Business News EUR to USD Euro (EUR) GBP to EUR GBP to USD Pound Sterling (GBP) US Dollar (USD)
Pound rebounds on shock core inflation jump Euro dented by softening inflation US Dollar wavers on mixed Fed messaging US Core PCE index … read more
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GBP/USD Strikes One-Month Low amid UK Private Sector Slowdown Australian Dollar (AUD) Daily Update Pound Sterling (GBP) US Dollar (USD)
Pound (GBP) Limited by Mixed PMI Data The Pound (GBP) saw limited trade against most peers yesterday, as lacklustre private indexes sapped … read more
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Pound US Dollar (GBP/USD) Exchange Rate Rebounds off One-Month Low amid Debt Ceiling Crisis Concerns GBP to USD Pound Sterling (GBP) US Dollar (USD)
May 23 2023Pound US Dollar (GBP/USD) Exchange Rate Recovers as Debt Ceiling Fears Hit USD (Updated 16:15, 23/05/23) The Pound US Dollar (GBP/USD) exchange rate … read more
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US Debt Ceiling Crisis Weighs on Currencies Australian Dollar (AUD) Daily Update Euro (EUR) Pound Sterling (GBP) US Dollar (USD)
Pound (GBP) Muted amid Lack of Data The Pound (GBP) lacked direction yesterday, as a lack of economic releases left Sterling vulnerable to market … read more
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Pound US Dollar Weekly Forecast: GBP/USD Fluctuates amid Wavering Rate Hike Bets GBP to USD Pound Sterling (GBP) US Dollar (USD) Weekly Forecast
May 22 2023The Pound US Dollar (GBP/USD) exchange rate traded in a wide range last week, as central bank rate rise bets remained in flux What’s Been … read more
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Pound US Dollar (GBP/USD) Exchange Rate Jumps following Fed Powell Comments GBP to USD Pound Sterling (GBP) US Dollar (USD)
May 19 2023Pound US Dollar (GBP/USD) Exchange Rate Rallies as Markets Scale Back Fed Bets (Updated 16:55, 19/05/23) The Pound US Dollar (GBP/USD) exchange rate … read more