Markets Watching Sunni Insurgency in Iraq with Great Apprehension

June 16, 2014

Further violence in Iraq kept the WTI oil price near $107 per barrel, lifted gold by 0.5% to $1,280.90 per ounce, and raised the yen to 137.71 per euro, strongest since February 6.  Sterling is unchanged unbalance against the dollar but earlier surpassed $1.70 for the first time since August 2009, touching a high of […] More

One Way or Another

May 21, 2014

The euro zone economy is in desperate need of a weaker exchange rate.  No surer remedy exists for halting regional disinflation in a timely enough fashion and for ensuring against sliding  long-term inflation expectations amid actual inflation that is substantially below target.  The euro’s level is not an impediment to engineered depreciation.  It’s birth value […] More

Items of Interest

May 1, 2014

Stability of Dollar/Yen and Euro/Dollar Pairs Continuing One can only say so much about dollar stability against the yen and euro without getting bored and frustrated.  Currency watching isn’t fun without trend, but stability continues to reign.  Over the first third of 2014, the euro traded between a low of $1.3475 and a high of […] More

Expected Growth and Currency Movement

March 10, 2014

Early each March, the Economist’s monthly survey of forecasters introduces a new out-year.  Growth projections for 2014 first appeared in the March 9-15th, 2013 issue, and the first forecasts for 2015 are in the current March 8-14, 2014 issue.  The table below shows the growth rates survey participants were predicting for 2014 a year ago […] More

Equities But Not Dollar Benefiting from a Lack of Alternatives

February 20, 2014

Former British Prime Minister Thatcher popularized the acronym T.I.N.A. — there is no alternative — to justify painful fiscal austerity and deregulation in the early 1980s.  The logic is analogous to a quote from Sherlock Holmes:  “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.”  The principle seemingly explains […] More

Currency Reflections on a Wintry Day

January 23, 2014

Optimism about U.S. growth prospects continues to mount, and many currency watchers have been awaiting just such a sign as the needed catalyst for a significant rise in the dollar against its main rival, the euro.  Canadian monetary officials just raised their projected 2014 U.S. growth rate by a half percentage point to 3.0%.  That […] More

Awaiting U.S. Data on this Historic Anniversary

August 15, 2013

There is a big U.S. data release calendar that includes industrial production, the Philly Fed and Empire State manufacturing indices, the National Association of Home Builders index, Treasury-reported capital flows (TIC), and weekly jobless insurance claims.  Former President Nixon severed the link between the dollar and gold 42 years ago today. Trading in Europe was […] More

Diverse Movements in Foreign Exchange

July 19, 2013

Great stability around the $1.30 level continues to characterize the key EUR/USD relationship.  Coming into 2013, the euro was expected to trade considerably weaker than this threshold.  For the past several years, in fact, there have been analysts predicting a return to par, based on Europe’s relatively weak economy, the fragility of Europe’s banks, and […] More

Lots of Puzzles to Ponder

June 6, 2013

The dollar at today’s lows of 95.90 yen and 1.3306 per euro had depreciated 7.6% against the yen since May 22 and 3.8% against the euro since May 17.  This slide was associated with the softest patch of equity market performance so far this year.  Investor expectations haven’t been very consistent.  One perception is that […] More

What’s Changed?

April 4, 2013

This important week in the global economy has changed some things in foreign exchange but left even more relationships in a purgatory between the bust of 2008-09 and the next definitive stage.  Market and real economic conditions might cave into a Stockmanesque chaos.  While there is wide agreement that much could yet go wrong, a […] More