A trader works on the floor before the Dow Jones closing bell at the New York Stock Exchange, January 31, 2017 in New York. AFP / Bryan R. Smith
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If visibility and predictability are two foundations upon which stable financial markets are built, comments from the White House this week on the U.S. dollar suggest investors should brace for increased foreign exchange volatility.A weaker dollar would be instrumental to achieving that goal.The dollar hit its lowest since the week after the U.S. presidential election – its index value against a basket of currencies falling to 99.35 and the euro rising above $1.08 for the first time in almost two months.One-month euro/dollar implied volatility posted its third-biggest monthly rise on record in November, only behind September and October 2008 in the white heat of the global financial crisis.The dollar's surge over the previous three years was potentially destabilizing for the global financial system, given that dollar borrowing from non-U.S. institutions firms and households outside the United States is almost $10 trillion.
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