When the China credit impulse rises, the U.S. dollar drops.
China Credit Impulse Vs. USD
USD
USD is losing reserve currency status – COFER
Balance of Payments
The USD is dependant on the current account and capital account. Since the current account deficit is widening, the capital account needs to rise in order to stabilize the USD. If the equity markets fall with a rising current account deficit, the USD will fall.
Current account declining:
Capital account rising:
Stable USD:
This video explains it:
COFER shows USD is losing status as reserve currency
USD is losing status as reserve currency.
USD Net Spec Positioning Long
The U.S. dollar shorts are now flushed out, this could mark the top in the U.S. dollar.
Dollar Shorts to be Flushed Out
Shorting the dollar is overcrowded.
Overnight Reverse Repurchase Agreements Vs. Effective Fed Funds Rates
Whenever the effective Fed funds rate drops too much, the Federal Reserve will conduct overnight reverse repurchase agreements where it will sell treasury securities to the market in exchange for cash. This will push up the Fed funds rate temporarily.
A rise in overnight reverse repurchase agreements (RRP) indicates that there is too much liquidity and tells us that the U.S. dollar is about to get weaker on lower Fed funds rate pressure.
For example, In May 2021, there was an excess amount of reserves at the banks, pressuring the Fed funds rate lower. The RRP purchases skyrocketed.
USD is losing reserve currency status
The U.S. dollar is losing its status, dropping to 59% allocation.
Dedollarization in Russia
The euro is conquering the dollar.
Q2 2020 COFER Update
The latest Q2 2020 COFER numbers show that the U.S. dollar has lost some reserve currency status.
Correlation Economics (Backup) 