Euro
Pause in the Dollar
March 12, 2010
Upward pressure on the dollar has lost steam. As of 16:00 GMT today, the U.S. currency was showing losses for the week of 1.3% against the Canadian dollar and Swiss franc, 0.9% against the euro and Australian dollar, 0.6% relative to the kiwi but only 0.2% versus sterling. Previous dollar strength had been mostly at [...] More
U.S., Japanese, Ezone, and British GDP Growth in 4Q09
March 11, 2010
With revised Japanese figures out today, a reasonably representative comparison of growth in the four main advanced economies last quarter can be made and are summarized below, where C is personal consumption, I is business investment, G is government expenditures, and X represents exports. The percentage changes conform to the U.S. custom of annualization, that [...] More
All Major Currencies Carry Negative Baggage
March 5, 2010
Currency movements continue to be choppy and mixed from the standpoint of a dollar holder. So far this past week, the greenback recorded gains of more than 1.0% against sterling and the yen but also lost significant ground against the Canadian and Australian dollars. In between those extremes, identically small net gains were posted against [...] More
How Bullish Should One Be About the Dollar?
February 26, 2010
This past week saw the dollar perform better in the minds of analysts than in the marketplace. Gloom about Europe’s peripheral members — affectionately known as the PIIGS for Portugal, Italy, Ireland, Greece and Spain — generated further speculation that the euro might be headed for divorce or worse, a failed marriage. Even so the [...] More
Euro: An Imbalanced Marriage
February 24, 2010
To join Europe’s common currency, nations are required to meet five economic stress tests to ensure suitability. The standards are rigorous but count only for a brief moment in time. A Stability and Growth Pact, separate from the Maastricht Treaty that established the common currency, was meant to ensure that countries do not stray far [...] More
The Dollar Express
February 19, 2010
The dollar is coming off yet another solid week. While attention continued to be riveted on the high debt and deficits of Euroland’s peripheral countries like Greece, Spain, Portugal and Ireland, the dollar scored its largest advances of the week against the yen, a new development, and sterling, which is an old story. The yen has [...] More
The Mark, the Euro, the Dollar and the Yen: Now and Then
February 12, 2010
Risk aversion has the dollar grinding higher, but I’d like to focus this week’s Foreign Exchange Insights essay on the longer term prognosis. During the first 25 years of flexible exchange rates, the mark, yen and Swissy were called “hard currencies” because conservative monetary and fiscal policies in Germany, Japan and Switzerland promoted low inflation, strong [...] More
Exposing a Myth About Long-Term Growth Expectations and the Dollar
February 8, 2010
Faster growth in the United States than in either Euroland or Japan is hard-wired into analyst medium-term projections. Results from a monthly survey published in the latest issue of The Economist projects that GDP in the United States will rise 3.0% this year but just 1.4% in Euroland and 1.5% in Japan. It’s only early [...] More
Risk Aversion Trade to Push Dollar Higher
February 5, 2010
Although world economic prospects are not shabby in their aggregate, the gap between dynamic emerging markets and schlerotic advanced ones keeps widening. Australia’s quarterly Monetary Policy Statement, published today, asserts that “the world economy is now widely expected to grow by around 4% in each of the next couple of years,” yet the risk aversion [...] More
U.S./Euroland PMI-Services Differential Narrowed at Start of 2010
February 3, 2010
Last month, the U.S. economy improved relative to Euroland in service-sector industries as well as manufacturing. As the dollar strengthened, such was the sense of the two economies that investors had perceived. Both regions remain in a recovery stage as confirmed by the above-50 readings shown below in all four PMIs last month. The U.S. [...] More
