A blow-off rally in the dollar index ran out of steam dollar as the world's second-leading economy and most populous country challenges the U.S. dominance in the worldwide financial markets. Moreover, China's rise as an economic and military power threatens U.S. History will look back at the February 2022 Xi-Putin handshake as a watershed event that changed the world, increasing the odds of WW III. Meanwhile, China remains committed to reunification with Taiwan, another issue that divides the world's nuclear powers. A growing number of countries have remained on the sidelines. While the U.S., European NATO allies, Canada, Japan, Australia, and other partners lined up in opposition to Russia's aggression, Russia, China, North Korea, Iran, and their allies created a bifurcation of the world's nuclear powers.
Less than one month later, Russian troops crossed the Ukrainian border, launching the first major war on European soil since World War II. In February 2022, the handshake between Chinese President Xi and Russian President Putin on a massive trade agreement and " no-limits" alliance changed the world's power balance. Worldwide economics and political events can drive markets higher or lower. Markets reflect the economic and geopolitical landscapes The Invesco DB US Dollar Index Bullish Fund ( NYSEARCA: UUP) moves higher with the dollar index and could be moving much lower over the coming months and years. remains the world's leading economy and military power, but China is nipping at its heels, and the rise of China will likely usher in the fall of the dollar's dominance. backed the dollar with gold when it became the world's reserve currency, it abandoned the gold standard in 1971, making it a fiat currency. Today, reserve currency status reflects the faith and credit of the government issuing the legal tender. created the Federal Reserve System in late 1913 and emerged as the supreme power after the First World War. dollar has been the leading global reserve currency.įrance held the world reserve currency from 1720 to 1815, and Britain took over from 1815 to 1920. Reserve currencies are critical for cross-border international transactions, international investments, and all aspects of the global economy. dollar as the world's reserve currency may not be exaggerated, given the geopolitical shift over the past year.Ī reserve currency is a foreign exchange instrument held in significant quantities by central banks, governments, monetary authorities, and supranational institutions as part of their foreign currency reserves. Meanwhile, the reports of the demise of the U.S. One of the most repeated misquotes has been, " Reports of my death have been greatly exaggerated." Samuel Clemens, aka Mark Twain, may not have uttered these words, but they continue to live on as part of his vast legacy.
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