US dollar - American currency through the eyes of Masterforex-V traders

• April 7, 2019
• Tips for tourists
• Iminany

Everyone has probably seen the abbreviation USD, but what does it mean? Literally, USD is the United States dollar, that is, the national currency of the United States. Moreover, over many years the US dollar has become the world's reserve currency. Prices for various products, as well as the economic atmosphere of the country as a whole, depend on its exchange rate. However, USD is used as a national currency not only by the United States, but also by other countries, for example, El Salvador or the Marshall Islands.

All banknotes issued since 1861 are still considered valid and are used in payment systems along with new banknote issues. Moreover, the USD currency has been no longer backed by a gold reserve for over forty years.

Main characteristics of the US dollar

Foreign shares

Foreign shares in Russia are traded in dollars on the St. Petersburg Stock Exchange. At the time of writing, there are already 1,648 titles. Among them are the largest and world-famous companies: Apple Inc.; Amazon.com, Inc.; Facebook, Inc. etc. The full list can be viewed on the official website of the exchange. It is constantly expanding, so investors have plenty to choose from.

You can choose stocks to suit your financial capabilities. For example, one share of Apple costs about $115, Tesla – $420, Facebook – $285. Profitability will consist of two components:

1. The growth of quotations under the influence of supply and demand in the market.
2. Dividends.

Look, for example, at the Apple stock price chart over 5 years. The price changed from $29.05 in October 2015 to $115.04 in October 2020.

Pros of the tool:

• the investor becomes the owner of the largest companies in the world;
• large selection of promotions;
• in the long term, high returns with well-chosen assets;
• the opportunity to choose stocks that have consistently paid dividends for decades.

Minuses:

• the instrument is not suitable for short-term investing - the volatility is too high;
• it is necessary to open a brokerage account with a broker that provides access to the St. Petersburg Stock Exchange (for example, Sberbank does not provide this opportunity);
• availability of skills in selecting shares of individual issuers.

What are the reasons for US leadership and the stability of the dollar?

American analysts argue that the US economy rests on 4 “pillars” - natural resources, labor, production equipment and entrepreneurship. To this it is worth adding important “touches”:

1. The dollar is the main currency of the world, and the Federal Reserve controls 90% of the world's national banks , which creates exceptional (privileged) development conditions for the United States. Read more: What are the roots of devaluation and revaluation of national currencies? How the US dollar came to rule the world
2. The USA is a world leader in many advanced sectors of the economy - in the aviation and space industries, military-industrial complex, IT technologies, nuclear energy, shipbuilding, chemical industry, pharmaceuticals, medicine, film industry, etc. producing goods and services worth 1/4 of world GDP in monetary terms (gradually transferring obsolete sectors of the economy to other countries - light industry, automotive industry, etc.).
3. Highly developed is... US agriculture , which produces 16% of all world grains (soybeans, wheat, barley, oats, corn, sugar, tobacco, etc.)
4. The United States is the sole world leader (39%) in the field of financial investments: the world's two largest stock exchanges are located in New York - NYSE and NASDAQ with a capitalization of $23.2 trillion, respectively. and $11.2 trillion. from $84.86 trillion. “real money” invested in the stock market in the world - see the author’s Masterforex-V rating of the 60 largest exchanges in the world.
5. Since 1946, the US economy has grown by about 3.5% every year (there have been declines of up to 0.3%, and there has been growth of 5.1% per year) . The US dollar is the reserve currency for all countries; in the SWIFT system, the share of the US dollar is at least 42% (for comparison, the euro is 32%, and the share of the ruble is 0.35%)
6. The country's private sector employs 85% of working Americans . More than 99% of all private employers in the United States are small businesses. There are approximately 30 million small businesses in the United States that generate nearly $700 billion in revenue. (In Russia 2.8 million). The US ranked 6th in the 2021 Ease of Doing Business Index.
7. The US Army and Navy are the strongest in the world, suppressing any attempts by the ex-leaders of Libya, Iraq, and Grenada to counteract America’s national interests.
8. The Federal Reserve's refinancing rate for commercial banks remains at 1.75% in dollars, which makes it possible to issue low-interest loans to the real sector of the economy.

Difficulties:

1. The federal government has run a deficit between exports and imports every year since 1999.
   exports $1.66 trillion (2018). Main partners for 2021 - European Union 18.7%, Canada 18.3%, Mexico 15.9%, China 8%, Japan 4.4%
2. imports $2.54 trillion (2018). The main partners for the same year are China 21.4%, European Union 18.9%, Mexico 13.2%, Canada 12.6%, Japan 6%
3. External debt is $22.56 trillion. (2018) or 105.3% of GDP , for comparison, Japan - 250.9% of GDP, Italy - 131% of GDP, Portugal - 127%, etc.

Eurobonds

Eurobonds are debt securities that the issuer issues in a foreign currency. For Russia, this is any currency other than rubles. As of October 2021, government and corporate securities are listed on the Moscow Exchange.

The first ones are issued by the Ministry of Finance. The choice is small, and given the face value of $200,000, it’s quite small - only two securities are available to the average non-millionaire investor:

1. “Russia-2028-7t” with a par value of $1,000 with maturity in 2028. Based on the results of trading on the Moscow Exchange on October 23, 2020, the price fluctuated around $1,717 per Eurobond. Yield to maturity – 2.455%.
2. “Russia-2030-11t” with a face value of $1 with maturity in 2030. Lot size – 1,000 securities. Quote as of October 23, 2020 – $1,161.5 per lot. Yield to maturity – 2.057%.

As you can see, the yield is not much higher than foreign currency deposits. The tools are equivalent in terms of reliability. The issuer is the state, which means that loss of money can only occur if the country declares a default. This has already happened in our history. But it is unlikely that the government will want to repeat this.

Significantly greater choice among corporate Eurobonds. You can select papers with denominations starting from $1,000. A few examples:

1. Lukoil Eurobond LUK-30 with a par value of $1,000 with maturity in 2030. Traded at $1,070 (107% of par). Yield to maturity – 3% per annum.
2. Gazprom Eurobond GAZPR-34 with a par value of $1,000 with maturity in 2034. Traded at $1,523 (152.3% of par). Yield to maturity – 3.66% per annum.
3. Eurobond of the State Transport Leasing Company GTLK-26 with a par value of $1,000 with maturity in 2026. Traded at $1,031 (103.1% of par). Yield to maturity – 4.27% per annum.

The risk of default on corporate Eurobonds is higher than on government bonds. Therefore, it is necessary to select securities after analyzing the company’s debt load, its payment history, and the main multipliers.

Pros of the tool:

• the yield is higher than on foreign currency deposits;
• high reliability, especially for government securities;
• regularly receiving coupons to your account, which allows you to generate passive income over a long period of time;
• the ability to lock in profitability for several years.

Minuses:

• does not fall under the deposit insurance program;
• there is a risk of issuer default;
• high entry threshold (from $1,000);
• knowledge of fundamental analysis is required if you plan to buy corporate Eurobonds;
• you need to open a brokerage account, although this has long been no longer a problem (online in 5 minutes).

Fed key rate for the US dollar

The next important factor that has a huge impact on the formation of the US dollar exchange rate is the key rate of the Central Bank - the Federal Reserve System (FRS) for the US dollar. This is the minimum interest rate at which the Central Bank provides loans to commercial banks. The “golden rule” of the key rate is quite simple and consists in finding a certain balance between foreign investors and national enterprises, because

• the lower the interest rate, the more profitable the loans received at low interest rates by national producers (for example, Switzerland, Japan, the EU with key rates of -0.75%, -0.1% and 0%). But a low key rate is not beneficial to investors who withdraw their capital from the country, provoking a devaluation (fall in exchange rate) of the national currency;
• the higher the interest rate , the greater the influx of foreign capital flows into the state, but interest on loans immediately increases for the real sector of the economy. When rates rise, the exchange rate will certainly rise, provided the economy is stable.

What path did the Fed choose for the US dollar: see the table of the Central Bank’s key rates for other national currencies.

EUR/CHF

The trading volume is large, quotes are predictable, since the Swiss economy is closely connected with the European economy. Here, traders use resistance and support levels to identify entry and exit points. This currency pair is suitable for players who prefer to conduct short-term and long-term trading. What motivates this couple? Gold, since the Swiss currency is pegged to the price of gold, the value of this precious metal is reflected in this pair. The couple comes into motion only during a period when there is tension in the world and foreign capital comes to Switzerland.

Dollar banknotes

It should be noted that all US notes since 1861 remain legal tender. The obverse of the banknotes depicts the following US statesmen:

• 1 dollar - 1st US President George Washington
• 2 dollars - 3rd US President Thomas Jefferson
• 5 dollars - 16th US President Abraham Lincoln
• 10 dollars - first Secretary of the Treasury Alexander Hamilton
• 20 dollars - 7th US President Andrew Jackson
• 50 dollars - 18th US President Ulysses Grant
• 100 dollars - scientist and diplomat Benjamin Franklin

There are also rare banknotes:

• 500 dollars - with the image of US Supreme Court Chief Justice John Marshall
• $1,000 - featuring the first Secretary of the Treasury, Alexander Hamilton
• $5,000 – 4th President James Madison
• $10,000 - US Supreme Court Chief Justice Salmon Chase

It is difficult to say how many banknotes from the century before last - the beginning of the last century are left in hand, but among the rare $10,000 banknotes there are 336 pieces left, and $5,000 - only 342 pieces.

EUR/JPY

The euro/Japanese yen pair is quite in demand among traders. Its demand is due to high volatility, which allows you to generate income during short-term trading. Moreover, this currency pair is characterized by long-term trends, which makes it possible to apply trend strategies. Here the main currency is the euro, and the quoted currency is the Japanese yen.

The popularity of this pair is also due to the characteristics of the economies of Europe and Japan. Japanese industry is export-oriented. It exports most of its products to the USA, China and the EU. It is because of this dependence that the Japanese government constantly underestimates the exchange rate of the yen in relation to world currencies.

What does 1 million dollars look like?

$1 million is just 100 packs of 100 dollar bills, weighing about 10 kg. , fits freely in the case.

This is what the most successful trader of our time, Warren Buffett, earns in about 19 minutes (the income of his Berkshire Hathaway fund for 2021 was $28.2 billion after taxes. That’s about $77 million per day)

EUR/GBP

The EUR/GBP pair is preferable for beginners, due to the fact that there are no sharp price jumps, and this allows traders to make informed decisions. Here the main currency is the euro, and the quoted currency is the British pound. Quotes are influenced by the following factors:

• Macroeconomic.
• Political.
• Natural.

Dollar exchange rate to other national currencies

How do traders make money? On changes in exchange rates. See real-time quotes and charts online for the US dollar against other national currencies:

• USD RUB - American dollar to ruble exchange rate;
• USD BYN - dollar to Belarusian ruble exchange rate;
• USD UAH - dollar to Ukrainian hryvnia exchange rate;
• USDX - dollar index;
• GBP USD - British pound to dollar exchange rate;
• USD JPY - dollar to Japanese yen exchange rate;
• USD CHF - dollar to Swiss franc exchange rate;
• USD PLN - dollar to Polish zloty exchange rate;
• NZD USD - exchange rate of the New Zealand dollar to the US dollar;
• USD CAD - US dollar to Canadian dollar exchange rate;
• AUD USD - Australian dollar to US dollar exchange rate;
• USD SEK - dollar to Swedish krona exchange rate;
• USD KZT - dollar to tenge exchange rate;
• USD CZK - dollar to Czech crown exchange rate;
• USD NOK - dollar to Norwegian krone exchange rate;
• USD AZN - dollar to Azerbaijani manat exchange rate;
• RON USD - Romanian leu to dollar exchange rate;
• USD CNY - dollar to yuan exchange rate;
• HUF USD - exchange rate of the Hungarian forint to the dollar;
• USD VND - dollar to Vietnamese dong exchange rate;
• USD SGD - dollar to Singapore dollar exchange rate;
• USD THB - dollar to Thai baht exchange rate;
• USD MDL - dollar to Moldovan leu exchange rate;
• USD HKD - US dollar to Hong Kong dollar exchange rate;
• USD ZAR - dollar to South African rand exchange rate;
• USD GEL - dollar to Georgian lari exchange rate;
• USD ILS - dollar to new shekel exchange rate;
• USD TRY - dollar to Turkish lira exchange rate;
• USD MXN - dollar to Mexican peso exchange rate;
• USD INR - dollar to rupee exchange rate.

EUR/USD

This pair is considered the most liquid, as it is used by the majority of traders. With the help of this pair, 1/3 of all Forex transactions are made. Here the main currency is the euro, and the quoted currency is the dollar. The pair's exchange rate expresses how many dollars should be given to buy euros. For example, a quote of 1.26 means that you will have to pay $1.26 for a euro.

The quotes of this pair are influenced by fundamental factors. For example, the price of the pair is influenced by the European Central Bank and the American Federal Reserve.

Sources for Fundamental Analysis of the US Dollar

Data on the economic situation in the USA is presented in the following research Wiki Masterforex-V:

• US economy : US budget deficit, US among the TOP 10 countries in terms of external debt, US dollar, Washington is the capital of the USA, America and the TOP countries in terms of average pension, US banknotes, USA and TOP 10 countries in terms of gold reserves, USA and inflation by country of the world, USA in credit ratings from Fitch Ratings and Standard & Poor's, USA and inflation by country of the world, unemployment rate in the USA;
• Central bank and issuer of dollars: US Federal Reserve;
• Financial regulators : CFTC, , NFA;
• Exchanges : Comex, NYSE, ICE, NYMEX, MGEX, NASDAQ, Nadex, CME, CBOT, CME, etc.
• US stock indices USDX, NASDAQ 100, S&P 500, Dow Jones - 30;
• US brokers : Interactive Brokers, ATC BROKERS, TD Ameritrade, FOREX.com, OANDA, Ally Invest;
• National payment systems of America: Google Pay, Discover Card, Amazon Pay, Stripe, Payza, Bitpay, Global Payments, ICBC, Payoneer, VISA, Discover Card, Diners club international, Google Checkout, Apple Pay, Western Union, Mastercard, Neteller, Paysafecard ;
• Foreign payment systems with instant USD exchange: WeChat Pay, Sberbank Online@yn, Xe com, Alfa-click, Payu, PayOnline, NixMoney, Sofort, Privat 24, Zolotaya Korona, Samsung Pay, Paymaster, ATF24, Maxipey, AliPay, Rapida, Contact, Belkart, Altyn Asyr, Paxum, Perfect Money, Elexnet, Paysera, RBK Money, Ecoin, Interkassa, Alexcredit, Qiwi, Money Online, Cloudpayments, JCB, Yandex.Money, Moment, Shopify, HandyBank, Bank of China, Prostir, Robokassa, AdvCash, WebMoney, MultiCard, Payza, CardPay, Payanyway, Portmone, Unistream, Idram, etc.
• Prominent American traders: Simons, Pedersen, Neely, Soros, Williams, Meriwether, Gann, Grinn, Kiyosaki, Douglas, Case, Gerchik, Bollinger, Dow, Livermore, Griffin, Prechter, Mootz, Buffett, Neeson, Elder, Jones, L. Williams.

What is United States Dollar?

In the modern world, USD is the most common currency and is the reserve currency in most countries. Many states borrowed it as a national one, since creating a new one is quite a costly affair. For example, East Timor, which was formed relatively recently, did this. But in Zimbabwe, the American dollar became a salvation due to wild inflation.

The American dollar (USD) is a currency equal to one hundred cents. Among the paper banknotes in circulation around the world you can find one-dollar, two-dollar, five-dollar, ten-dollar, twenty-dollar, fifty-dollar and one hundred-dollar bills. Coins are presented in the form of a penny or one cent, a nickel or five cents, a dime or ten cents, a quarter or twenty-five cents, a half dollar or fifty cents. Also, in addition to banknotes, one and two dollars are issued in the form of coins.

Sometimes it is difficult to determine among the coins what kind of currency it is. USD coins do not have digital designations, but there are the necessary inscriptions following the example of the above classification: one dime, quarter, five cents and so on.

Recommended brokers for trading the dollar on the forex market

To trade the dollar and other currency pairs in order to make a profit on trends, a trader must first open a trading account (deposit) with one of the Forex brokers. Masterforex-V Academy has been maintaining its independent rating of Forex brokers for more than 12 years, based on more than 30 objective criteria for assessing brokers (spread and swaps, presence or absence of licenses from financial regulators, offering CFDs, NDD, STP, ECN, PAMM and LAMM accounts, opportunities opening a large number of lots and hedging them (including through a lock/lock instead of Stop Loss), the availability of financial instruments from stock, futures, cryptocurrency, currency and commodity exchanges, etc.), as well as on the reviews of the traders themselves.

As a result, out of 400 companies, we identified only 12 “best Forex brokers” of the major league and another 20 reserve companies from the 2nd league (popular companies, but with numerous complaints from clients). Here is a list of them.

Sincerely, wiki Masterforex-V, free (school) and professional training courses Masterforex-V.

Index ETFs

If you don’t want to understand the technology for selecting shares and bonds of individual issuers, then you have the opportunity to buy index exchange-traded funds on the Moscow Exchange: ETFs and mutual funds. The difference between them is the jurisdiction of the management company. The first are registered abroad, the second are purely Russian history.

Now funds and management companies compete with each other - the investor only benefits from this. You can diversify your portfolio by country and asset (stocks, bonds, commodities, money market, mixed investments).

A complete list of available ETFs and mutual funds is here. But not all of them are traded in dollars. It is best to find out this information in your broker’s personal account, because some set their own restrictions on purchases.

Let me give you a few examples. Index fund share quotes (as of 10/23/2020):

• VTBU (Russian Eurobonds) – $53.92;
• SBCB (Moscow Exchange Russian Eurobond Index) – $17.18;
• VTBG (gold) – $0.01617;
• FXGD (gold) – $12.91;
• VTBA (US stocks) – $11.99;
• FXUS (US shares) – $63.15;
• SBSP (S&P 500 Index) – $18.33;
• VTBE (emerging market stocks) – $11.02;
• FXCN (shares of Chinese companies) – $52.9;
• FXRL (Moscow Exchange index) – $38.7.

The entry threshold is low, so many private investors can afford to invest in several dozen companies from around the world at once. Fund returns over several years are currently available only from the management company FinEx. She was one of the first to enter the Russian stock market. The remaining management companies have become more active in the last 2 years.

For example, the 5-year return on an ETF popular among Russian investors under the ticker FXUS (shares of American companies) amounted to 74.82% in dollars.

Let's look at the pros and cons of investing in index funds.

Pros:

• wide diversification across countries and instruments, which reduces the risk of capital loss;
• low entry threshold;
• high reliability – control is carried out by several independent companies at once;
• high liquidity of the instrument - you can buy and sell within a couple of minutes;
• tax benefits (IIS, LDV).

Minuses:

• Dividends and coupons are not paid into the account, they are reinvested and increase the value of the asset;
• Compared to American exchanges, the choice of index funds is meager, but the list is updated with new ones every year;
• fund management fees (included in the share price) are too high compared to US ETF counterparts;
• you need a brokerage account.

GBP/CHF

This pair is among the watchdogs of Forex. Competition between these two currencies began even before the creation of the euro. Switzerland is the largest center of the world banking system. There are a large number of banks in this country; according to calculations, there is 1 financial instrument per 1000 people.

Any trading on cross rates is associated with an increase in the spread, due to the fact that in addition to the main currencies, the dollar takes part in the calculation, with the help of which the quotes are obtained. The value of this pair is calculated using the following formula: GBP/USD*USD/CHF.

The most optimal time for trading on this pair is between 11 and 19 hours, since this is when the London Stock Exchange operates. The Asian and American stock exchanges operate at night, which is why this pair shows little activity at this time.

USD/HKD

This pair falls into the exotic category. It is most active during the Asian session. The price of a pip here is 0.0001 HKD. The spread is usually 15 pips. Hong Kong is on the list of the world's largest financial centers, which explains the demand for this couple. Hong Kong constantly attracts foreign investors, which ensures the stability of the Hong Kong dollar.

GBP/JPY

This pair is used by many professional traders. It has high volatility, which allows traders to conduct short-term and aggressive trading. The range of jumps can be three hundred pips, which appeals to players who want to quickly make a profit. This pair is not recommended for beginners in the Forex market, as sudden fluctuations can cause them to suffer serious losses.

USD/RUB

This pair cannot boast of being in demand, so it belongs to the exotic category. In terms of the number of transactions, it cannot be compared with the euro/dollar pair, this is due to the fact that players do not believe in the stability of the Russian economy. The ruble exchange rate is regulated by the state, which is not very attractive to traders. Thus, there is a risk of unforeseen actions on the part of the state contrary to events in the economy. These actions allow the state to fulfill its social responsibilities, but many traders view them negatively.

Reviews about the project

This is where the true face of the project is revealed. The Internet has already accumulated a sufficient number of negative reviews about cooperation with this company. Ex-clients complain about many things. For example, it is impossible to withdraw money from a deposit; the administration stupidly ignores all customer complaints and stops responding to investors who have problems withdrawing funds. Each review confirms the fraudulent behavior of the organizers of this project.