Top tip: USD weakness reigns year end

Author: Giles Coghlan | Category: Education

Dollar has reasons for weakness

Some of the reasons for the dollar weakness at the end of the year is due to US tax legislation. Many US based companies will reduce their tax liability by recording smaller amounts of cash on their balance sheets. It makes sense to move cash to overseas daughter companies and then move the cash back at the start of the year. 

Therefore, we see this pattern in the USD: Pronounced dollar weakness that accelerates into year end, but then reverses into the start of the new year.
Dollar has reasons for weakness

You can search the DXY yourself here and play around with the dates etc. Check out just the last few days of December for a very interesting result. 

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