OPEN-SOURCE SCRIPT
Core USD Liquidity Index
### 🏦 Core USD Liquidity Index (v1)
**Purpose:**
The *Core USD Liquidity Index* tracks global **USD liquidity conditions**, the single most important macro driver behind risk-on and risk-off environments.
It combines 4 key monetary metrics into one normalized composite line:
- **FRED:RRPONTSYD** → Reverse Repo balance (⬆️ = liquidity tightening)
- **FRED:WALCL** → Federal Reserve balance sheet (⬆️ = liquidity expansion)
- **FRED:TB3MS** → 3-Month Treasury Bill rate (⬆️ = liquidity tightening)
- **TVC:DXY** → U.S. Dollar Index (⬆️ = global liquidity tightening)
---
### 🧭 **How it Works**
Each metric is normalized and aggregated to create a unified liquidity signal.
The index functions as a **"Liquidity Thermometer"**, visualizing whether dollars are entering or leaving global financial circulation.
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### 📊 **Interpretation**
| Zone | Meaning | Market Behavior |
|------|----------|-----------------|
| 🟢 Above 0 | Liquidity expanding | Risk assets (BTC, SPX, Tech) strengthen |
| ⚪ Around 0 | Neutral liquidity | Sideways / indecisive markets |
| 🔴 Below 0 | Liquidity contracting | USD strengthens, risk assets weaken |
---
### 💡 **Use Cases**
- Identify **macro liquidity inflection points** ahead of price action
- Track **Fed policy impact** (balance sheet, RRP flows, T-Bill yields)
- Confirm or fade BTC/SPX rallies based on liquidity context
**Recommended timeframe:** Weekly or Daily
**Best pairs:** BTCUSD, SPX500, NASDAQ100, XAUUSD
**Purpose:**
The *Core USD Liquidity Index* tracks global **USD liquidity conditions**, the single most important macro driver behind risk-on and risk-off environments.
It combines 4 key monetary metrics into one normalized composite line:
- **FRED:RRPONTSYD** → Reverse Repo balance (⬆️ = liquidity tightening)
- **FRED:WALCL** → Federal Reserve balance sheet (⬆️ = liquidity expansion)
- **FRED:TB3MS** → 3-Month Treasury Bill rate (⬆️ = liquidity tightening)
- **TVC:DXY** → U.S. Dollar Index (⬆️ = global liquidity tightening)
---
### 🧭 **How it Works**
Each metric is normalized and aggregated to create a unified liquidity signal.
The index functions as a **"Liquidity Thermometer"**, visualizing whether dollars are entering or leaving global financial circulation.
---
### 📊 **Interpretation**
| Zone | Meaning | Market Behavior |
|------|----------|-----------------|
| 🟢 Above 0 | Liquidity expanding | Risk assets (BTC, SPX, Tech) strengthen |
| ⚪ Around 0 | Neutral liquidity | Sideways / indecisive markets |
| 🔴 Below 0 | Liquidity contracting | USD strengthens, risk assets weaken |
---
### 💡 **Use Cases**
- Identify **macro liquidity inflection points** ahead of price action
- Track **Fed policy impact** (balance sheet, RRP flows, T-Bill yields)
- Confirm or fade BTC/SPX rallies based on liquidity context
**Recommended timeframe:** Weekly or Daily
**Best pairs:** BTCUSD, SPX500, NASDAQ100, XAUUSD
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Open-source script
In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. Kudos to the author! While you can use it for free, remember that republishing the code is subject to our House Rules.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.