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With the stable performance of listed companies driving the S&P 500 index towards record highs, the US dollar index has fallen to nearly a month low, and the US dollar has fallen against all other G10 currencies. In the Beige Book of its latest economic report compilation, the Federal Reserve said that the US economy grew at a "moderate to moderate" pace in September and early October, as the new wave of COVID-19 epidemic slowed down and began to subside.

The US dollar is the dominant international reserve currency, and the status of the reserve currency largely depends on the size and strength of the US economy, as well as the dominant position of the US financial market. However, will the attractiveness of the US dollar significantly decrease, posing serious problems for US financing? Economists at the French Foreign Trade Bank report that there may be several reasons for the decline in the attractiveness of the US dollar.

The Risk of Loss of US Treasury and External Solvency

The characteristic of the United States is a dual deficit: fiscal deficit and external deficit, so investors may be concerned about the parallel trend of loss of fiscal solvency and loss of external solvency. From 2002 to 2008, this concern has emerged and led to a significant decline in the US dollar exchange rate.

Structural deterioration of the US economy

Productivity growth and participation rates have both decreased, especially in the United States, where the calculation method is the same as in the eurozone, which may be due to low skill levels, leading to a significant decrease in potential growth rates. In addition, policies that reduce dominance in the United States will lower stock prices and reduce the attractiveness of the United States to stock investors.

Greater credibility of the euro

The development of cooperation policies among eurozone countries may lead to European savings financing investments in the eurozone.