Currency strategists at Goldman Sachs note that the widely used DXY dollar index that reflects the performance of US dollar against a basket of currencies consisting of euro, British pound, Japanese Yen, Canadian Dollar, Swedish Krona and Swiss Franc is build on the old trade balances of the 1980s. That time the most trade flows were across the North Atlantic, the emerging markets were weak due to the series of crises, while the world was in the state of the cold war.

The specialists point out that it would be much more reasonable to use the broader trade-weighted index that is adjusted for inflation to measure the value of US currency. Goldman Sachs and the Federal Reserve have such.

Both indices give greater weight to developing countries that have become more important US trading partners and whose currencies have been performing pretty well. According to Goldman, these indexes show that the broad traded weighted dollar is at historical record minimums, clearly weaker than at the previous record lows at the beginning of 2008.

The analysts say, however, that the time to buy USD hasn’t come yet. In their view, the greenback will keep weakening as the rising budget deficit and the Fed’s loose monetary policy will keep weighting on its rate. However, if only the Fed changes its approach or the overseas investors increase demand for US equities or there will be a sustainable growth of US jobs, the situation may change very quickly. As a result, Goldman Sachs says that it’s necessary to pay much attention to how the events enroll in the United States.