Ben Laidler, Global Markets Strategist at eToro, has shared with Cointelegraph en Español a recent analysis in which he talks about the rebound of the US dollar, which has faded somewhat after its 19% increase so far this year in recent months.
According to Laidler, despite its rally, it still trails oil in terms of returns on major assets. In his opinion, the greenback has been put on the defensive by the hope of an upcoming slowdown in the increase in Fed rates and the latest downward rally in the Stock Market.
“The dollar is expensive and most of its higher-than-average return is already behind us. Of course, it will continue to be supported since interest rate differentials will remain wide and global risks will not disappear overnight “Laidler noted, that as he also describes it, this is a recipe for some relief, both for commodities and emerging markets, but not a reversal, as The latest analysis of world currencies from the Bank for International Settlements (BIS) makes clear the dominance of the US dollar.
In this sense, Laidler clarifies that currencies are without a doubt the most liquid asset class, with an estimated daily trading volume of 7.5 trillion eclipsing the less than 1 trillion for the global equity or fixed income markets of the United States. “These continue to grow, with volumes 14% higher than those of the last survey of 2019”Laidler mentioned.
“The dollar dominates the space, with 88% of all currency transactions. And this weight has not changed in recent years, with the EUR, JPY, GBP and CNY falling behind, while the UK leads currency trading, with 38% of the total, maintaining a historical and geographical position in ever narrower currencies”he added.
Secondly, Laidler also talked about the USD/EUR pair, which is by far, says the analyst, the most liquid currency pair. According to him, it leads the flagship US dollar DXY index with a 58% weighting.
As for the most liquid non-USD currency pair, Laidler said it is EUR/GBP., ranking tenth with a trading share of 2%. More broadly, he explains that developed market currencies dominate the volume ranges, while emerging markets account for just 13.8% of the volume. “This excludes China’s CNY which grows at 7% in fifth place, up from 4%, though still dwarfed 2:1 for its global trading share”, he clarified.
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