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Trade-Weighted Dollar

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Trade-Weighted Dollar
The average value of the U.S. dollar with respect to a basket of 10 foreign currencies. The Federal Reserve calculates the value of the trade-weighted dollar. When the value increases, American exports become more expensive in foreign countries; when it decreases, they become more affordable. See also: Strong Dollar, Weak Dollar.


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From 20012008, the Federal Reserve trade-weighted dollar index declined from 130 to 96 without stemming the trade deficit.
Taking a look at the trade-weighted dollar index, we can see much of the same chart as in EURUSD, AUDUSD or NZDUSD - an anti-dollar trend channel that has come to some measure of resistance.
Over the past six years, the value of the trade-weighted dollar has fallen by more than a quarter, as the United States has continued to rack up historically unprecedented trade deficits.
 
 
 
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