#FedRateCutAffectsDollarTrend The movement of the U.S. dollar (USD) is extremely important because it impacts global financial markets, trade, and economies. Here’s why: 1. Global Reserve Currency • The U.S. dollar is the world’s most widely used currency in international trade and finance. • Around 60% of global central bank reserves are held in USD. • When the dollar moves, it affects the entire global economy. 2. Impact on Global Trade • A strong dollar makes U.S. exports more expensive and imports cheaper, which can hurt U.S. businesses but benefit foreign exporters. • A weaker dollar makes U.S. exports cheaper and more competitive globally but raises import costs, potentially increasing inflation. 3. Effect on Commodities (Oil, Gold, etc.) • Most commodities (oil, gold, metals) are priced in dollars. • A stronger dollar makes commodities more expensive for other countries, often lowering demand and prices. • A weaker dollar makes commodities cheaper, increasing demand and pushing prices up. 4. Influence on Stock Markets • A rising dollar can hurt U.S. companies that rely on exports but benefit companies that import goods. • Emerging markets with dollar-denominated debt struggle when the dollar strengthens because it increases their repayment costs. 5. Impact on Inflation & Interest Rates • A stronger dollar can help reduce inflation by making imports cheaper. • A weaker dollar can increase inflation by raising import costs.