So we have to look beyond manipulation for explanations of the USD's uptrend. The conventional view--which I have shared--is that the trend toward higher yields in the U.S. acts as a magnet for capital in a zero or negative-yield global economy.

The other dynamic that have been widely covered is the demand for USD to pay loans denominated in dollars.

While these explanations make sense, they don't tell the whole story.

Let's start with the foundation of currency supply and demand: capital flows.

The key characteristic of financial capital is its mobility. Mines and farmland are immobile, factories are costly and time-consuming to move, and labor is only mobile on the margins: the majority of the workforce is anchored by family, language and familiarity to their country or region of origin.

Moving to a new locale and new type of work is costly in terms of time, money and effort, and fraught with risks.

Now compare the ease of moving electronic money around the world. A few clicks and a few seconds are all that's needed.