Dollar Movements From Two Benchmark Dates

July 18, 2008

The U.S. currency’s relationships against the euro and yen and often compared with one another.  So too are dollar/Swissy and cable (a euphemism for sterling against the dollar).  A third comparative cuplet involves USD movements against two commodity currencies, the Canadian dollar and Australian dollar.  To grasp the big picture especially in summer, it helps to track net dollar changes from the end of the previous year and from closing levels before the U.S. memorial day holiday.  One can see in the table below that 1) the dollar has performed considerably better against yen than the euro this summer after losing similar ground against those chief rivals through May 23rd; 2) the dollar continues to drift very gradually lower against sterling and is no longer plunging against the Swiss franc; and 3) the Aussie dollar continues to be the better-performing of the two commodity currencies, probably because Canada is more closely linked to the U.S. business cycle than Australia.  Dollar/yen strength thrives on a willingness to assume risk.  The Swiss franc does best when the dollar is free-falling in general, and the Canadian dollar should do better if the dollar falls more generally, or if investors become less fearful about the U.S. business cycle.

Dollar Against: Since end-2007 Since May 23rd
Euro -7.8% -0.5%
Yen -4.2% +3.4%
Sterling -0.5% -0.8%
Swiss franc -9.8% -0.2%
C-dollar +1.3% +1.7%
A-dollar -9.9% -1.2%



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