Currency Report: The trade-weighted U.S. Broad Dollar Index posted a reading of 114.419 for October 2021 – up 0.59% month on month (m/m) – and its greatest monthly increase since July. This index value is down 1.44% on a year on year (y/y) basis.
Figure 1 shows the track of the Broad Dollar Index from 2006 to present. On a 12-month moving average (12MMA) y/y comparison, the index was down 4.61%.
Table 1 lists the exchange rates of the 9 steel trading nations that we follow, plus their m/m change. (Note that Turkey’s currency data is released on a delay, so the rates presented are one month behind the rest.) When looking at monthly changes, it’s important to remember that a declining exchange rate indicates growing strength of the foreign currency vs. the U.S. Dollar, since it now requires less foreign currency to equal one USD.
Month over month, we saw the Canadian Dollar, Chinese Yuan, and the Euro strengthen vs. the USD in October.
At Gerdau, we keep a close eye on the currency market because it has a profound impact on both the import and export of raw materials, semi-finished and finished steel. A strengthening USD is a double-edged sword, as it makes the U.S. market more attractive for other nations to export into the U.S., but it also makes U.S. goods more expensive to export to other nations.