Loading the player...
A:

The two terms, weak dollar and strong dollar, are generalizations used in the foreign exchange market to describe the relative value and strength of the U.S. dollar against other currencies.

A strong dollar occurs when the U.S. dollar has risen to a level against another currency that is near historically high exchange rates for the other currency relative to the dollar. For example, the exchange rate between the U.S. and Canada has hovered between 0.6 CAD/USD and 1.1 CAD/USD, if the current exchange rate is at 0.7 CAD/USD, the American dollar would be considered weak and the Canadian dollar strong. A strong U.S. dollar, on the other hand, is one that is trading at a historically high level, such as 1.1 CAD/USD.

The terms strengthening and weakening have the same context but refer to the changes in the U.S. over the period of time being mentioned. A strengthening dollar is one in which the U.S. dollar has increased in value compared to another currency. This means that the U.S. dollar now buys more of the other currency than it did before. A weakening U.S. dollar is the opposite as it means the U.S. dollar has fallen in value compared to the other currency - making the U.S dollar buy less of the other currency.

The terms strong, weak, strengthening and weakening can be used to refer to any currency.

RELATED FAQS
  1. How can I get 100k in a Canadian bank to a U.S. Investment firm with minimal loss ...

  2. Why is currency always quoted in pairs?

    When reading currency quotes, you have probably noticed that there is only a single quote for a pair of currencies. Currency ... Read Answer >>
  3. How are international exchange rates set?

    International currency exchange rates display how much one unit of a currency can be exchanged for another currency. Currency ... Read Answer >>
  4. How does the balance of payments impact currency exchange rates?

    Take a brief look at the relationship between a nation's balance of payments and the exchange rate value of its currency ... Read Answer >>
  5. If a country's currency is determined by the strength of its economy, why isn't the ...

    Generally speaking, when Country A's currency is worth more than that of Country B, it does not necessarily mean that Country ... Read Answer >>
  6. How is the forex spot rate calculated?

    The forex spot rate is determined by supply and demand. Banks all over the world are buying and selling different currencies ... Read Answer >>
Related Articles
  1. Trading

    What Do Weak Dollar And Strong Dollar Mean?

    A weak dollar and a strong dollar describe the strength of the U.S. dollar in comparison to other currencies in the foreign exchange market.
  2. Trading

    The Pros & Cons Of A Strong Dollar

    As the U.S. economy has emerged from the Great Recession, the strength of the U.S. dollar has also improved.
  3. Trading

    How To Calculate An Exchange Rate

    An exchange rate is how much it costs to exchange one currency for another.
  4. Investing

    Explaining Fixed Exchange Rates

    A government using a fixed exchange rate has linked the value of its currency to the value of another country’s currency, or the price of gold.
  5. Trading

    Top Economic Factors That Depreciate The $US

    A variety of factors contribute to currency depreciation, including monetary policy, inflation, demand for currency, economic growth and export prices.
  6. ETFs & Mutual Funds

    USDU: WisdomTree Bloomberg US Dllr Bullish ETF

    Explore an analysis of information on the WisdomTree Bloomberg U.S. Dollar Bullish Fund, a currency ETF that tracks the overall performance of the U.S. dollar.
  7. Markets

    Countries Most Affected By A Strong U.S. Dollar

    The U.S. dollar is still the most important currency in the world. It's used for trade, foreign reserves, and as a substitute for the gold standard. As the U.S. dollar continues to grow stronger, ...
  8. Trading

    How Do You Make Money Trading Money?

    Making money in the foreign exchange market is a speculative process. You are betting that the value of one currency will increase relative to another.
  9. Trading

    What is an Indirect Quote?

    An indirect quote expresses the amount of foreign currency required to buy or sell one unit of the domestic currency in the foreign exchange markets.
  10. Markets

    How U.S. Firms Benefit When The Dollar Falls

    When the greenback is weak, smart investors will invest in multinational companies to benefit.
RELATED TERMS
  1. Dollar Rate

    The exchange rate of a currency against the U.S. dollar (USD). ...
  2. Weak Dollar

    A situation where the U.S. dollar's value is decreasing relative ...
  3. Reciprocal Currency

    In the foreign exchange market, a currency pair that involves ...
  4. Dollar Bull

    An investor or speculator who is optimistic about the outlook ...
  5. International Currency Exchange Rate

    The rate at which two currencies in the market can be exchanged. ...
  6. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center