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The weakness of the dollar reigns at the end of the year

The dollar has reasons for weakness

Some of the reasons for the dollar’s weakness at the end of the year are due to US tax laws. Many US-based companies will reduce their tax liability by recording smaller amounts of cash on their balance sheets. It makes sense to transfer money to overseas affiliates and then pay the money back at the start of the year.

Therefore, we see this pattern in the USD: Pronounced dollar weakness that accelerates at the end of the year, but then reverses at the start of the new year.

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