What is the US Dollar’s Performance Compared to Other Currencies?

”This year has been a tale of two dollars.

The U.S. dollar’s strength has buffeted stocks and bonds in poorer countries, raising concerns that further appreciation in coming months could destabilize the emerging world.

Yet the dollar in recent weeks has slipped against some of its developed-market peers like the euro and yen, even as the outlook for growth in some of those places has started to darken.

The ICE Dollar Index, which measures the U.S. currency against a basket of six currencies including the euro and yen, has slipped 1.9% from its August peak. Those losses came even as the dollar surged in emerging markets, pummeling currencies such as the Turkish lira, Argentine peso and South African rand.

‘We view the dollar strength this year as being a countertrend,’ said Jack McIntyre, portfolio manager at Brandywine Global, which oversees $74 billion. In late August, his fund held positions in the local-currency bonds of countries like Brazil, Mexico and Poland, which he believes have been unfairly punished and will rebound over the long term.

‘The real trend is a weaker dollar,’ he said.

In contrast to the rout in emerging markets, Europe and Japan ‘are not really freaking investors out at this point in time,’ said Kit Juckes, a strategist at Société Générale.

Mr. Juckes estimates the dollar is about 10% overvalued against the currencies of major U.S. trade partners.

The dollar could still shoot higher if trade tensions mount, said Ben Randol, senior analyst of G-10 foreign-exchange strategy at Bank of America Merrill Lynch. He forecasts the euro will fall to $1.12 against the dollar in the third quarter, from around $1.16. That dollar strength is likely to be fleeting, however. The bank sees the euro strengthening to $1.20 over the next year.”