For US major trade partners, a mixed bag on their costs for the dollar …

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The top twelve destinations for U.S. exports are Canada, Mexico, China, Japan, Great Britain, France, Germany, Belgium, South Korea, Norway, Brazil, and Taiwan. There has been a mixed bag in terms of increases or decreases in each country’s cost of the US dollar since the beginning of 2021. Using currency data from OANDA, we identified the rate changes between 1 January 2021 and 18 March 2021.

Currency pair1 January 202118 March 2021Percentage change
USD/CAD1.27411.2450-2.3
USD/MXN19.883320.59713.6
USD/CNY6.52776.5006-0.4
USD/JPY103.1600109.07005.7
USD/GBP0.73250.7189-1.9
USD/EUR(1)0.81530.83882.9
USD/KRW1,086.10001,128.13003.9
USD/NOK8.54548.4699-0.9
USD/BRL5.19165.62088.2
USD/TWD28.077228.27240.7
Source: OANDA

(1) France, Germany, and Belgium use the euro as their currency. We refer to them collectively as the Eurozone.

Since January, countries seeing their currencies significantly strengthen against the dollar are Canada and Great Britain. On the other hand, Mexico, Japan, the Eurozone, South Korea, and Brazil have seen their currencies significantly weaken, making their cost to import U.S. product more expensive.

The primary mover of currency rates is supply and demand. The increased price of the dollar could be a result of this basic economic principal. Changes in bond yields may also have an impact on currency pricing as well as changes in policy rates imposed on banks due to their central banks’ policy initiatives.

During the same period in 2020, with the exception of Japan, all other top US trading partners saw their costs for US exports increase as shown in the following table:

Currency pair1 January 202018 March 2020Percentage change
USD/CAD1.30161.41008.3
USD/MXN18.906422.826620.7
USD/CNY6.96687.00480.4
USD/JPY108.6300106.9900-1.5
USD/GBP0.75830.82318.5
USD/EUR0.89150.90351.3
USD/KRW1,154.56001,240.10007.4
USD/NOK8.790610.357317.8
USD/BRL4.01635.006924.7
USD/TWD29.953130.21870.9
Source: OANDA

The shut downs around the globe due to the pandemic we believe may be the significant factor behind the changes in direction of these currency pairs.

18 March 2021 11:58 am EST

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