Global anchor · Money · Currencies
45neutral
1.3% above its 10-year average, but by less than it usually is | Data for Aug 2026
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
What it is
The BIS effective exchange rate of the US dollar: its value against the currencies of dozens of trading partners, weighted by trade.
When the dollar strengthens, the burden grows for countries that borrow in dollars, and commodity prices often come under pressure.
Public substituteWe use this in place of “US Dollar Index (DXY)”. The DXY uses only six currencies, with the euro at about 58%; the BIS effective exchange rate of the dollar covers dozens of trading partners, weighted by trade. Both measure the dollar’s strength, but their scope and numbers differ. They measure similar things, but they are not the same number.
Higher = stronger dollar.
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also neutral
Short sample: positions start only in 2013 (less than 30 years), so conclusions should be more cautious.
When it was here before
US dollar after it began, cumulative1 yr2 yr3 yr
For each period, the changes 1, 2 and 3 years after it began are cumulative and measured from its first month; “What happened next” is measured from every neutral month, so the two give different numbers. The events named beside each period are major events of that time, not necessarily related to the readings here.
What happened nextSample too small to draw conclusions (past neutral months: 0; market episodes: 0).
Has hot or cold lined up with later returns?
2013–2021: average yearly change in US dollar over the next 5 years
In this period, the hotter the month, the lower the average over the next 5 years. The months overlap, so there are really only a few market episodes. This is a tendency, not a rule, and not a forecast.
What it is linked to
US dollartoEmerging marketsCommon explanation: Ripple · opposite direction
A strong dollar makes emerging economies’ dollar debts heavier, drives money out and tightens financial conditions
This issue: US dollar at 45 (neutral), Emerging markets at 53 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Supported by the dataAgreement +0.56 · in step in 5 of 5 5-year periods
US dollartoCommoditiesCommon explanation: Cause · opposite direction
Commodities are priced in dollars, so a strong dollar raises their cost for other countries and demand falls; from 2021, though, the two moved together for a time
This issue: US dollar at 45 (neutral), Commodities at 73 (warm) — at least one is in the neutral range (40–60), so we make no call this issue.
Supported by the dataAgreement +0.68 · in step in 7 of 8 5-year periods
US dollartoUSD/TWDCommon explanation: Ripple · Taiwan dollar weakens
When the dollar strengthens, foreign money flows out of Taiwan
This issue: US dollar at 45 (neutral), USD/TWD at 76 (warm) — at least one is in the neutral range (40–60), so we make no call this issue.
Not visible in our dataAgreement +0.04 · in step in 8 of 8 5-year periods
In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.
Financial stresstoUS dollarCommon explanation: Ripple · same direction
In a panic, money rushes into the dollar for safety
This issue: Financial stress at 12 (cold), US dollar at 45 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Not visible in our dataAgreement +0.10 · in step in 8 of 8 5-year periods
In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.
US dollartoUSD/CNYCommon explanation: Ripple · renminbi weakens
When the dollar strengthens, the renminbi comes under pressure
This issue: US dollar at 45 (neutral), USD/CNY at 31 (cool) — at least one is in the neutral range (40–60), so we make no call this issue.
Not visible in our dataAgreement −0.18 · in step in 5 of 8 5-year periods
In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.
US 10-yr yieldtoUS dollarCommon explanation: Cause · same direction
When US rates are relatively high, money flows into dollar assets
This issue: US 10-yr yield at 91 (hot), US dollar at 45 (neutral) — at least one is in the neutral range (40–60), so we make no call this issue.
Our data show the oppositeAgreement −0.64 · in step in 3 of 8 5-year periods
Gold and US dollar are often linked: they often move in opposite directions because both respond to real interest rates; neither directly causes the other. They share a common source, so we do not draw a link between them.
Values
Data and sources