Yeah, USD determines financial conditions in the world = pace of global credit expansion, I guess this paves the way for equity markets too where the risk priced in is an ease of access to credit sources (i.e. borrowing costs)One of the biggest reasons is definitely the US debt instruments held by other nations - it amounts to about $7 trillion.
USD is major currency all over the world that is why changes in its trend affect on other currencies too. All major currency look like they are interrelated .I found out that even if the currency pair is not related to USD, EUR AUD for example, it is still somehow being affected by USD news. My position was suddenly reached stop loss in a few minutes. Why is that?
Yeah but this link gradually weakens as more and more countries use local currencies in bilateral settlement in order to reduce dependence on USD, in the long-run this doesn't bode well for US economy.The answer to this question is very simple. Because American economy affects the global market. Basically it is due to post WW2 period when the economies of all the European countries were destroyed because of military combats, the decision was made to make US dollar international currency because of its consistency and stability. US dollar has remained its status until now, so the major part of international trade is implemented using USD as a currecncy.
The situation here is quite easy to understand: US economy affects Us currency which affect all the international trade. That is why if you go the local store of electronics, you may see that the prices there move along the USD price just because of the fact that such devices were imported to your country and the import was paid in USD.