The US dollar is not just a currency; it’s a barometer of the global economy’s health and a pivotal player in the international financial landscape. Its importance stems from several key factors. The USD serves as the world’s primary reserve currency, and central banks and financial institutions hold it globally to conduct international transactions and support their currencies.
Additionally, as the dollar strengthens, commodities priced in USD become more expensive for holders of other currencies, potentially leading to decreased demand and lower commodity prices. Economists measure inflation through various indices, with the Consumer Price Index being the most widely recognised and the Personal Consumption Expenditures . The PCE measure is a comprehensive indicator of the total spending by individuals and households on goods and services in an economy. The PCE is significant because it accounts for a large portion of overall economic activity and is considered a key indicator of inflation.
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