The U.S. dollar index is a basket of six major world currencies weighted against the greenback in one composite price. See on the daily bar chart the USDX continues to push higher and has this week hit a five-month high. The appreciating dollar is impacting secondary currencies significantly, in that those currencies are losing purchasing power on world markets, where many products are priced in U.S. dollars. The Turkish lira, the Brazilian real and the Chinese yuan currencies have all experienced serious depreciation against the greenback. Central bankers are starting to take note of the secondary currency markets, and are becoming worried about dislocations in the secondary currency markets spreading into the major currencies–a contagion. Stay tuned!
