Currency & the dollar

The dollar smiles: it rallies when the US does exceptionally well AND when the world does exceptionally badly, only weakening in the boring middle. Every EM crisis since the 1980s is also a strong-dollar event.

Knowing which side of the smile you're on predicts most global stress. Most of the world's debt, trade, and reserves are denominated in dollars — when the dollar moves, the world's financial weather changes.

FX reserves

59%

FX trade volume

88%

Cross-border loans

48%

International bonds

47%