Dollar
Big Storm Coming and No Place to Hide
May 18, 2012
The euro’s increasing vulnerability is the main topic of currency market chatter. It has taken 2.5 years for the euro to depreciate about 23 U.S. cents or some 15%. Over this span, a familiar sequence of crisis intensification, slow policy response, and eventual announcement of measures to preserve the euro has kicked the problem down [...] More
Pacific Rim Share Prices Clobbered on Escalating Greek Crisis
May 16, 2012
Equities fell 3.2% in Hong Kong, 3.1% in South Korea, 2.4% in Australia, 2.2% in Taiwan, 1.8% in India, 1.6% in Singapore, Indonesia and China, and 1.1% in Japan. The British Ftse and German Dax have lost 0.7% and 0.6%, but the Paris Cac is 0.7% firmer. Sterling reacted poorly to the Bank of England [...] More
Dangerous to do Business
May 11, 2012
Risk aversion is back in vogue. One saw this in equities more quickly than in foreign exchange. Investors can think of many reasons to be averse. The May 6th elections in Europe improved the probability of Greece leaving the common currency bloc in 2012. Four years and 10 months after the onset of the global [...] More
April in Figures
April 30, 2012
Concern about the growth outlook in advanced economies revived in April, dragging share prices and both short- and long-term interest rates somewhat lower. Gold barely moved on balance, but oil prices closed higher for the month and stayed above the key $100 per barrel level. The yen strengthened 3.5% against the dollar, which slipped below [...] More
Will Currency Logjam Break Up in May?
April 27, 2012
The dollar fell modestly against the euro and Swiss franc during the last full calendar week of April, a bit over 0.5% against the British and Australian currencies, and slightly more than 1.0% relative to the Canadian dollar and Japanese yen. Since the start of the year, the dollar has eased by 5.0% or less [...] More
What an Absence of High Inflation Means for Currencies
April 20, 2012
Economists and investors see different primary economic threats. In the marketplace, a high level of fiscal deficit phobia continues. The fear is that fiscal excess accommodated by low central bank interest rates will produce accelerating inflation. Elevated commodity prices may constitute the foothills of that trend, and the pessimists also note that many emerging economies [...] More
Concerns about Euro Debt and Chinese Growth
April 16, 2012
The euro fell 0.4% on balance against the dollar and dipped as low as $1.2995, the first sub-$1.3000 reading since February 16. Share prices in Japan tumbled 1.7% in Japan to the lowest session closing level since February 21. Speculation persists that the BOJ will extend quantitative easing later this month. However, Japanese department store [...] More
To What Drum Will Major Currencies March?
April 6, 2012
A special report on foreign exchange in the April 5th edition of the Financial Times presents two competing currency market drivers, mood swings between risk aversion and risk appetite and conventional cyclical discrepancies between key economies. It is asserted that risk on/risk off swings dominated market behavior last year, preventing significant directional movement and ultimately [...] More
March and 1Q12 in Figures
March 31, 2012
The dollar posted strong gains in March against the Australian dollar and yen but was narrowly mixed otherwise. Sovereign bond yields rose, led by a 24-bp in the 10-year Treasury. Three-month euribor rates sank sharply. Most equities performed well, while strong January-February gains in gold and oil prices were reversed partly. 10-Yr Yield 03/30/12 Chg [...] More
Currency World at First Quarter-end 2012
March 30, 2012
From a government perspective, chronic currency appreciation is undesirable. In the quarter now ending, officials in Japan, China, and Switzerland did their utmost to keep a lid on the yen, yuan, and franc. A drop in the yen of more than 6% against the dollar helped lift Japan’s Nikkei-225 by 19.3% in the quarter, some [...] More
