Comparing Year-to-Date Currency Movement to a Year Ago

June 2, 2015

Short-term currency forecasting at the moment is rendered to a roll of the dice because of the uncertain outcome of aid-for-reform talks between Greece’s creditors and the Tsipras-led government.  So let’s digress, and see how currency movements so far this year compared to movements one year earlier. 

Among the dollar’s key bilateral relationships, only the Swiss franc (1.1%) and the Chinese yuan (0.1%) are firmer now against the dollar.  From end-2013 to June 2, 2014, the dollar had risen 3.0% against the yuan and 0.7% versus the Swissie.  Otherwise, the dollar has performed better these past five months than in the equivalent period of 2014.  For instance, the U.S. currency’s rise of 8.9% this year dwarfs a 1.2% net gain in the same period of 2014.  A jump of 9.1% relative to the kiwi contrasts with a 2.7% drop a year before.  The climbs of 5.6% and 7.2% relative to the Australian and Canadian dollars are paired with a decline of 3.5% versus the Aussie currency and a 2.6% advance in the loonie one year before.  Net movements in the yen and sterling were modest in each year but different in direction.  The dollar has advanced 3.8% against the yen compared to a 2.8% drop a year earlier.  It is up 1.7% vis-a-vis the pound after dipping by 1.1% in the same period of 2014.

From the standpoint of high/low range width, USD/CHF this year has been off the charts, spanning a whopping 38.6%.  This enormous volatility was established early when Swiss officials abruptly lifted an asymmetric cap on the franc’s euro cross-rate.  The high-low range of the USD/CHF during January 2-June 2, 2014 had been 13.1% in width.  EUR/USD this year has fluctuated in a 15.8%-wide band, six percentage points greater than a year before.  In contrast, commodity-sensitive currencies have ranged less widely so far this year than they did in the same months of 2014.  For instance, the loonie’s traveled in a 10.6% range, down form 14.9%.  The kiwi’s high-low boundaries have been 11.5% apart, down from 14.3%, and the Aussie dollar’s range of 10.1% has been less than half as great as the 22.5% range a year earlier.  Even more stunning has been the diminished volatility of the yen, which has spanned 7.8% versus a high-low range a year earlier of 21.9%.  Sterling, too, has been steadier, moving over an 8.6% span against a range of 14.7% a year before.

Finally, consider trade-weighed currency performances.  On such a basis, the dollar since the start of this year is up 6.8% compared to an uptick of less than 1% a year before.  Mirrored against this has been the trade-weighted euro, down 7.1% this year versus a dip of 0.7% a year earlier.  The 6.1% trade-weighted fall of the Canadian dollar has been almost three times greater than its 2.2% slide a year earlier.  The yen has edged just 0.2% lower in trade-weighted terms this year, compared to a 4.4% rise a year before.  Sterling shows the greatest similarity in the two year, up 3.5% trade-weighted since the start of 2015 compared to a 2.4% gain a year before.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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