Seeking Alpha

The Dollar Is Still Very Weak, But Up On The Margin

Includes: UDN, UUP
by: Calafia Beach Pundit

I like to feature this chart every month because it is arguably the best way to judge the dollar's true strength against other currencies on a trade-weighted and inflation-adjusted basis. As you can see, while the dollar is still very weak from a long-term historical perspective, it is up from its all-time lows in mid-2011 (up 4.6% vs. a broad basket of currencies, and up 11.6% vs. a basket of major currencies).

This fits with my prevailing theme that although the current recovery is the weakest ever, it is nevertheless the case that conditions are improving on the margin. It's the change on the margin, not the level, that is most important from an investor's perspective.