What it is
The currency of the United States and the one most used between countries. Most commodities are priced in it, a large part of world trade is invoiced in it, and it is one side of most foreign-exchange transactions.
Who issues it
The Federal Reserve System is the central bank of the United States. Its notes are the paper dollar, and its Federal Open Market Committee sets monetary policy.
How it is commonly described
- Reserve currency
- Held in quantity by central banks and governments as part of their foreign reserves.
- Safe haven
- Commonly bought when investors are cautious. The label describes past behaviour; it does not say what happens next time.
The dollar is the main currency in which central banks hold their reserves, and the market for US government debt is deep enough for large holders to move in and out of. In periods of stress, demand for dollars has often risen for the same reason.
These are descriptions people use, drawn from how the currency has commonly behaved. They are not promises about how it will behave.
What typically moves it
- Federal Reserve policy, and what the market expects the Fed to do next
- US releases on employment and inflation, the two halves of the Fed’s mandate
- Yields on US Treasury securities compared with yields elsewhere
- Risk appetite: caution in world markets has often meant demand for dollars
- Its use in pricing commodities and settling trade, which creates demand unrelated to the US economy itself
These are the things people who follow this currency usually watch. They explain how the market works; they do not say what the exchange rate will do next.
The scheduled releases to know
- Employment Situation report (Non-Farm Payrolls)Published by Bureau of Labor StatisticsExplainer: NFP
- Consumer Price IndexPublished by Bureau of Labor StatisticsExplainer: CPI
- Federal Open Market Committee decisionPublished by Federal ReserveExplainer: Rates
- Gross Domestic ProductPublished by Bureau of Economic AnalysisExplainer: GDP
- Retail salesPublished by US Census BureauExplainer: Retail sales
- ISM Report On Business (manufacturing and services PMI)Published by Institute for Supply ManagementExplainer: PMI
No dates or figures are shown here: each publisher’s own calendar is the authority. The explainers are in Economic Events; a release without a link has no explainer on this site yet.
Its main session
New York. The dollar trades around the clock because it is in most pairs. Its own data and the Fed’s announcements arrive in the New York morning and afternoon, and the hours when London and New York are both open are usually the busiest of the day.
At GIO4X
GIO4X lists 7 currency pairs that contain the US dollar. Each pair’s contract and published conditions are on its instrument page, where they are labelled as indicative. They are not repeated here.
A short history
The dollar was established as the unit of the United States by the Coinage Act of 1792. The Federal Reserve was created in 1913. Under the Bretton Woods agreement of 1944 other currencies were fixed to the dollar and the dollar to gold; the United States ended that link to gold in 1971, and the major currencies have floated against one another since 1973.
Words worth knowing
A reference page. Educational information, not investment advice or a recommendation to trade. It gives no exchange rate, no interest rate and no forecast.