DollarM DollarM DollarM

Chart of the Week : Global USD liquidity

Picture of Christopher Dembik
Christopher Dembik

Head of Macroeconomic Research

Summary:  Our 'Macro Chartmania' series collects Macrobond data and focuses on a single chart chosen for its relevance. This week, we focus on global USD liquidity.

Click here to download this week's full edition of Macro Chartmania.

There is one thing that really matters more than others, and it is global USD liquidity. We operate in a dollar-based world, so USD liquidity serves as a key driver of the global economy and financial markets. The evolution of USD money supply in major economies is our favorite dollar liquidity indicator at Saxo Bank. In the below chart, we track USD liquidity based on the evolution of the monetary aggregate M2 in the 25 largest economies, converted into USD and minus the evolution of M3 in the United States. This chart tells us much more than any other on what may happen in 2022.

In the wake of the outbreak, USD liquidity increased reflecting efforts of the U.S. Federal Reserve to avoid a liquidity crisis similar or worse than that of 2007-08. It was successful. Since mid-2021, USD liquidity has started to decrease. But it remains abundant. This is so far so good for risk assets. The main question for 2022 is how quickly dollar liquidity will continue to fall. The U.S. Federal Reserve has realized that there was plenty of evidence they were behind the inflation curve. Expect the central bank to speed up taper, effective from January 2022. This will lead to a drop in USD liquidity. The last time the financial markets went through such a drop in 2018 and 2019, it led to an emerging market turmoil, deteriorated financial conditions and higher USD funding costs. This time is different, in our view. It would not be surprising to see the market quickly price in at least three 25 basis point hikes for 2022, following next week’s FOMC meeting. But this is a wrong assumption. Our baseline is that U.S. inflation will remain uncomfortably high longer than the market anticipates. But the U.S. Federal Reserve will certainly be extremely careful regarding the pace of normalization in order to avoid that growth derails and the economy falls into stagflation. USD liquidity will be lower than now. This is a certainty. However, it will certainly be high enough to have a net positive effect on financial markets, especially the equity segment, and the global economy.



The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.