A return to broad-based global optimism has caused a shift away from the Dollar being a currency supported by expansion of economic uncertainty and safe-haven. Insrtead, lack of support is stoked by the potential market projections of an aggressive rate cut action. Good news on the labor front would be insufficient to cushion the Dollar against these other considerations.

China most likely is considering expanding the role of the yuan globally to challenge the U.S. Dollar's dominance in international transactions. The U.S. Dollar is currently considered the reserve currency of the world, but a genuine long-term alternative to the U.S. currency could change that. China would have to avoid devaluing the yuan in order to achieve this. As Chinese assets are increasingly traded in global markets, more foreigners will need to trade in the yuan, which is the intent of the internationalization drive.

China's ultimate weapon would be to sell U.S. bonds, but that would hurt Chinese investments more than it would help them. China is the largest holder of U.S. debt, roughly $1.12 trillion in U.S. Treasury bonds.

The current U.S. Administration short-sightedly has accused Beijing of deliberately weakening the yuan to encourage foreign exports, but a weak yuan reduces investor confidence in it. China has an advantage in that presently domestic consumption there makes up only 40% of the country's GDP, leaving it room to expand. In the U.S., domestic consumption makes up 70% of the GDP, leaving less room to expand.

Dovish Federal Reserve meetings have led toi significant gains in the Swiss Franc against the U.S. Dollar. Lower U.S. Dollar yields plus MIddle East tensions are both very favorable to the Swiss Franc exchange rate. The Mexican Peso has also benefitted from the dovish meetings. The Bank of Mexico's governing board has a policy stance that is relative to the U.S. in a way that is closely followed by the Mexican board. The Mexican Board has a more hawkish stance.

A U.S. interest rate cut rumor is also pushing equities higher in the U.S. That market is an option other than trading in currencies.

Looser monetary policies from major central banks around the world help relieve pressures on emerging markets, but the U.S. trade war risks with China far outweigh these considerations. Turkey, Russia, and South Africa are among those to benefit from a stampede to higher-yielding assets in recent days as the U.S. and Europe boith hint of ionterest rate cuts. Russian and South African exchange rates hit their highest levels since August, 2018.

As the head of the European Central Bank, Mario Draghi, introiduces more stimulus measures, the euro has begun to drop against other currencies. Speaking in Portugal, Mr. Draghi said if the eurozone inflation did not return to its target of close to but below 2%, additional stimulus would be required. They would include more asset purchases by the bank or a cut in interest rates.

Latest job figures in the U.S. have encouraged traders to expect a rate cut.

The Pound continues to slip against the U.S. Dollar ahead of continuing votes by members of parilament on Brexit options. There is some focus on New Zealand in international currencies as its central bank signalled it may cut interest rates again.

Some ask given our status as the world's greatest debtor nation thanks to the Republicans, what is holding up the value of the U.S. Dollar at all? Why are people still pricing oil in dollars rather than moving to a currency issued by a more solvent country including the yien, yuan, or euro? The answer is that the U.S. economy is still the largest and most resilient in the woirld. The GDP's for the U.S. and Europe are roughly the same. China's GDP is about two thirds of this. But it is growing more rapidly than either the U.S. or Europe. Rapid growth in China may not be sustainable.

It has become harder to walk away from a mortgage in the U.S., and an end to the housing boom could set off another drop in U.S. housing prices. Lenders continue to be fairly easy with terms in order to entice people into loans. We may be seeing the beginning oif leveling off or falling housing prices now.