Buying US dollars in case of an emergency. This is a common sense among Forex and stock traders. The American economy is one of the largest in the world. The rise of India and Southeast Asia is now attracting attention in the world economy, but the strength of the United States is still enormous, and it is currently treated as the world’s key currency. Due to the nature of this key currency, it is easy to buy in the event of a war or conflict. To prove it, the US dollar is being bought in the war between Russia and Ukraine. Now that Japanese yen buying in the event of an emergency has collapsed, many people are running to buy US dollars.
Russia and Ukraine
Russia initially aimed to bring Ukraine down in just a few days. However, in a situation where we are struggling completely, it is no longer possible to have a perfect uniform. It was planned to siege and occupy the capital Kyiv, but abandon it and try to devote its strength to the Eastern Front. The Ukrainian army, on the other hand, avoids unnecessary battles and sets up guerrilla warfare in urban areas, avoiding unnecessary sacrifices. Ukraine also has relief supplies from Western countries and weapons are procured. As you can see, it is clearly a global emergency and the US dollar is being bought.
The daily rate of USD / JPY as of March 25, 2022. Buying US dollars is progressing, and Japanese yen is being sold. This composition hasn’t changed from about a year ago, and now it’s up to 122 yen. We are already seeing 125 yen, and in the long run it is doubtful whether anyone will buy Japanese yen.
The daily rate of EUR / USD as of March 25, 2022. When the coronavirus vaccine was developed two years ago, there was a flood of euro buying, but since then, US dollar buying has always preceded. With the outbreak of the Russia-Ukraine war, the buying of the US dollar has preceded, and the factor that the euro is bought is still thin.
The daily rate of GBP / USD as of March 25, 2022. It seems to be in competition with the EUR / USD, but overall, the US dollar buying is still ahead. Britain is close to Ukraine in the region, so it tends to be difficult to buy.
AUD / USD daily as of March 25, 2022. Currently there is a stronger currency than the US dollar, which is the Australian dollar. Australia is geographically far from Russia, Ukraine and even China, so you can buy it with confidence. Australia is by far the strongest of all currencies, partly due to the impact of the surge in crude oil. Currently, the US dollar is the strongest next to the Australian dollar.
The US dollar may also be related to other factors. The most important thing to know is the economic indicators of the United States. And there are other related factors as well.
Relationship with US Treasury Yields
There is not much correlation between US Treasuries and the US dollar. A rise in US Treasury yields when the market’s risk tolerance expands will be a factor in buying US dollars, but a rise in interest rates due to a decline in credit in US Treasuries will be a factor in selling US dollars, so the impact will differ depending on the factors behind the rise in interest rates. .. Therefore, the relationship between the two seems to exist and is weak.
Relationship with the gold market
The US dollar and gold prices are inversely related. When the US dollar soars, the gold price tends to fall, and when the US dollar plunges, the gold price tends to rise. It may or may not correlate with other markets such as crude oil, but it tends to be linked to the gold market.