Yen
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
An Outsized Interest Rate Cut by Australia’s Central Bank
May 1, 2012
The Reserve Bank of Australia’s Official Cash Rate was slashed by 50 basis points to 3.75%, twice the expected reduction. The Aussie dollar and kiwi in response fell by 1.1% and 0.7% against the greenback. The U.S. dollar otherwise rose 0.2% against sterling and 0.1% versus the yen and yuan while edging down 0.2% against [...] More
End-April Brings Confirmation of Spanish Recession
April 30, 2012
Spain posted a second consecutive quarter of negative GDP growth. Japan closed for Showa Day, commemorating Emperor Hirohito’s birthday. Euroland released data on consumer prices and money and credit growth. The dollar has advanced 0.4% against the Australian dollar, 0.3% versus the kiwi, and 0.2% relative to the loonie, euro and Swiss franc. The dollar [...] 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
More Disappointing News
April 27, 2012
S&P downgraded Spanish debt by two notches to BBB+ from an A rating previously and assigned a continuing negative outlook to such. Spanish unemployment jumped from 22.85% in 4Q11 to 24.44% last quarter, which was only a smidgen less than the historical high point. Spanish retail sales volume was 3.7% below a year earlier in [...] 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
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
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
In Search of New Foreign Exchange Equilibriums
March 23, 2012
Whether the euro looks resilient or weak depends on what comparisons to historical levels are chosen. Intuitively one expects this besieged money to be on the defensive. The Euroland economy is experiencing a recession. The debt crisis is at best in remission as attested by painfully high bond yield spreads with Germany. The Greek problem [...] More
Risk Aversion Fanned by Preliminary March PMI Readings
March 22, 2012
In Europe, share prices have tumbled 1.5% in Paris, 1.4% in Germany, and 0.9% in Britain. There were some big tumbles in the Pacific Rim including drops of 1.4% in Thailand, 2.3% in India, and 0.9% in Singapore. But equities rose 1.0% in Taiwan, 0.5% in Australia and 0.4% in Japan. Chinese stocks dipped 0.2%. [...] More
