Euro
Few Feeling Confident or Lucky on This Friday the Thirteenth
August 13, 2010
A mid-August Friday afternoon and Friday the thirteenth no less would be a precarious place for currency traders to sit in the best of circumstances, and these are certainly not that. Trouble lurks wherever one peers, and the market reaction is risk aversion. Start with the U.S. economy because that is where perceptions have been [...] More
Third Anniversary
August 6, 2010
The world financial crisis began on August 8, 2007. The third anniversary finds a very heterogeneous world business cycle. Growth in global real GDP is again above 4.0%, something almost nobody foresaw a year ago. Many emerging economies in Latin America and Asia, a far wider spectrum than just India and China, are experiencing very [...] More
U.S. Factory PMI Reading Below Euro Area Score for First Time in 19 Months
August 2, 2010
Manufacturing activity expanded at a slower rate, while the growth in Euroland manufacturing accelerated last month. The dichotomy in those trends makes sense in light of the the dollar’s 27.5% advance from 1.5149 per euro in late November to 1.1878 in early June. Both regions had solid above-50 readings between 55 and 57, but Europe’s [...] More
Beware of August
July 30, 2010
The upcoming third anniversary of the financial crisis finds advanced economies deeper in debt, struggling to maintain traction, and without a consensus over policy priorities. Confusion also exists over the next direction of major currencies. The dollar lost value against most currencies during July in a pattern that persisted into the final days of the [...] More
How Low Will the Euro Go By End-2010?
July 28, 2010
The euro presently shows a 10% net year-to-date decline against the dollar. At its low of $1.1878 in early June, the euro had dropped by 17.0% since the end of 2009. I do not expect the euro to be weaker than that June level on December 31. Some analysts are more bearish on the euro [...] More
Weak Euro Helping Europe and Hurting the United States
July 23, 2010
In disinflationary or deflationary times, it pays to have a depreciating currency. This lesson was underscored in the Great Depression when Britain went off the gold standard before the United States. The pound fell, and Britain’s economy faired better than America’s. The lines of causation between exchange rate changes and economic fundamentals do not only [...] More
A Lack of Confidence in Just about Everything
July 16, 2010
Investors have turned skittish. One sees this in wildly volatile stock prices – perhaps a sign of the summer season – but also in a sub-0.60% two-year Treasury yield and a 1.10% ten-year JGB yield. The resurgence of risk aversion ought to lend the dollar support, but the currency instead experienced a difficult week. That [...] More
Currencies More Sensitive to Global Growth Than Growth in Particular Economies
July 9, 2010
A more resilient euro has coincided with better-than-expected European data, but the rise from $1.1878 in early June doesn’t reflect strong confidence the short-term to medium-term economic outlook for the region. Industrial production during May recorded monthly advances of 2.6% in Germany, 1.7% in France, 1.0% in Italy, 2.6% in Sweden and 0.7% in Britain. [...] More
Stocks Rebound in Asia and Europe on Bottom-Fishing
July 6, 2010
U.S. traders returning after the Independence Day holiday weekend will find the dollar marginally softer than its closing levels last Friday, with drops of 0.8% and 0.6% against the Australian and New Zealand dollars, 0.4% against the Canadian dollar, but just 0.3% versus the euro and 0.1% relative to the Swiss franc and sterling. Dollar/yen [...] More
Midyear Reality Check of the Currencies
July 2, 2010
At the very least, the dollar is in a pause. During the week that bridged the second and third quarters, the dollar hit its weakest levels against sterling ($1.5231) and the Swiss franc (1.0581 per USD) since early May. The euro posted a high today of $1.2613, its best level since May 21 and 6.2% [...] More
