The charts below are for each of the G10 currencies versus an
evenly weighted basket of the remainder of their G10 peers. The charts
are small (as we work on updating the blog to allow links to larger
graphics), but they nonetheless do cover quite a bit of ground – 2500
data points for each in fact, which hopefully gives an interesting
perspective. Each of the time series starts at indexed 100 as of early
February 2002. (The start point of the index changes with every refresh
of the charts on a rolling basis.)
Note that the charts were cut before the last leg of the action in
the early US session after the news that Stark will resign from the ECB
(rumored because of disagreements on bond buying) and on news ECB will
back off on penalty rates for banks accessing emergency facilities.
USD
The US dollar has been dropping forever – note that while the
dollar index crossed the 200-day moving average, the USD/G10 basket has
not yet crossed this important level, though it is trading at the
highest level in months and may be confirming a transition to a bullish
trend after the recent basing action and loss of downside momentum.
EUR
How ironic is it that, as the EU is experiencing its worst
existential crisis to date, the Euro is back close to its lowest levels
in years….which are also the lowest levels since the Euro was launched
amid intense skepticism over the entire idea of a single currency back
in 2002.
JPY
The JPY remains resilient and relatively strong – but will likely
only be so as long as rates remain absurdly low and/or the BoJ and
Japanese government steal a page from the SNB’s book on the intervention
front
GBP
GBP is experiencing a bit of a revival on Euro misery and as its
down trend has been losing steam for a long time. Could the market be
getting too complacent on further GBP weakness?
CHF
The magnitude of the run-up and the subsequent reversal is
breathtaking, but leaves us, amazingly, still poised above the 200-day
moving average! There’s a lot more room for franc weakness if the SNB’s
intervention project succeeds.
AUD
AUD is extremely overvalued if the Asian growth story in any way
derails. The focus has been intense on Europe, but many risk appetite
signals are flashing around the world, which are most often associated
with Aussie downside. Aussie hasn’t been garnering sufficient notice.
CAD
CAD has been a relatively low beta currency over the years relative
to some of its peers. It is generally out of favor now, but could put
up a fight or at least avoid broad weakness if the US economy and USD
prove stronger than the market is currently expecting.
NZD
The NZD bull market has enjoyed an Indian summer, but it may fade
on the potential for an Asian hiccup and if the post NZ earthquake GDP
bump fades in the months ahead.
SEK
The krona is gaining favor as a safe haven from Euro turmoil. It
may rally passively for a while, but historically has a hard time if its
export markets are threatened.
NOK
NOK is very credible as a safe haven from a fundamental standpoint and
has room to rally further, but what point does the Norges Bank begin to
rattle it saber when EURNOK is already at almost decadal lows?
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