Name The Worst-Performing Currency Of The Year

Tyler Durden's picture

On the heels of Abe's final decision to appoint a somewhat middle-of-the-road 'dove' as BoJ Governor, we thought it appropriate to look at the year's FX performance to see who is 'winning' the currency wars so far this year. The answer may surprise you (or not if you had read this or this).

GBP (blue) is the 'worst'-performing currency versus the USD this year - having overtaken the JPY in the last two days... higher on the chart below is USD strength

 

Interestingly, given US equity performance YTD, the USD is 2.25% stronger on the year against a broad basket of currencies.

 

The USD is 'seasonally' strong in Q1 on average over the past 30 years but this rise is quite remarkable relative to that average and we can only imagine what impact this will have on corporate earnings for Q1 as the S&P 500's 46% overseas revenues gets notched down on the income statement.

Charts: Bloomberg

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TruthInSunshine's picture

The elite who meet to greet & beat at the G7 have given permission to Japan to "debase their way out of their debt" given that they are the the most indebted, crippled advanced economy of any particular one (the EU is obviously a spectrum of economies), and if not given the chance to devalue the yen into nothingness, they would soon be the circuit breaker that trips and blows up the global economy.

Just a thought.

EscapeKey's picture

Only if you consider public debts.

If taking into account all debts - including household, business and financial - the UK reigns supreme!

Great Britain indeed!

Ghordius's picture

yes, but the Bank of England can devalue at will - they tell me this is very important, and the new incoming governor has already stated he wants to push the pedal to the metal

Martin Wolf was writing lately in the FT that "tens of millions of people are suffering unnecessary hardship. It is tragic" and calling for an end to austerity

he ends the article with "In the long run, the fiscal deficit must close. In the short run, the UK has a chance to push growth. It should take it. So should the US"

can't argue with Martin Wolf, can I?

Sandmann's picture

Ghordius you know that no serious country can gain competitive advantage with Devaluation in the absence of an Export Sector operating in sectors with high growth of Demand and high Export Elasticity, and that Britain is not the prime example. Mark Carney comes from a country with overvalued Dollar predicated on raw materials and a bizarre housing boom. He is going to find the UK a nightmare and i doubt he will have an enjoyable time. Britain has devalued repeatedly since 1931 and has an ever-decreasing share of World Trade. It is an act od desperation rather than a credible policy option.

They did it in 2008 simply to compensate for the Blowout on QE and Bank Bailouts but you cannot win with such a policy when China is your trade partner

DaveyJones's picture

you mean we live in physical world? 

Half_A_Billion_Hollow_Points's picture

But of course, Tbills are the safest asset.  Or so I hear.

TruthInSunshine's picture

Many good points being made here regardless as to whose thesis is closest to reality (I mean that in a genuine, non-kiss ass way).

And regardless as to whose thesis is closest to reality, the cries from some who most likely didn't get the memo grow more frequent & louder:

02-28 13:03: Chrysler CEO says US automakers disadvantaged by weaker JPY

p.s. - ES, you make a very good point about the UK's debt load & its composition, but relative devaluation of the fiat currencies utilized by nations that are major net exporters & manufacturers of high value-added goods benefits the Japans much more so than the UKs of this world, in terms of allowing the current post-Plaza Accord monetary system to live another day, IMO.  To add a little more substance to this line of thinking, Japan is essentially a natural resource black hole, while the UK at least has oil off its shores and also is the domicile of some of the largest oil companies on the planet.

Half_A_Billion_Hollow_Points's picture

 

So if I read this right, hyperinflation in Japan comes much faster than the Queen's hyperinflation, right?  

In Japan, gov't will be printing the quadrillion **while the population is dumping their savings**.  In Queeny's fairy kingdom, the population will be happy to see debtloads getting easier.  

Does that make sense?

Ghordius's picture

Sandmann, how dare you to flaunt dirty facts against the words of brilliant people like Wolf and Carney

Al Huxley's picture

It's been made pretty clear, particularly since December, that the Western world can monetize without consequence.  So really, they should make things better for all of us (since they've expressed their really touching concern for the masses) and stop collecting taxes and just monetize the entire fucking budget, all the time.  And then all they have to do is print up a few extra gold contracts to keep the price of gold down, which will thus ensure there's no inflationary impact.  Big winfall for the prols that they're oh-so concerned about, no consequence, free fucking ponies all around.

OutLookingIn's picture

LMAO!

A discussion on the best looking horse at the glue factory!

EscapeKey's picture

carney is unquestionably brilliant - he was shoring russian bonds while advising them at the same time.

good thing those chinese walls are up, and all, or you might have considered it to be a huge conflict of interest.

Cdad's picture

I made this very point about 4 weeks ago...that the JPY trade may well become a trade that gets out of control.  And considering the absolute lack of understanding of this situation as measured by comments coming from the leadership in Japan, the Oh Shit moment seems close at hand.  And in the HFT world in which we live, we all know how quickly that can happen.  Hours?  Minutes even.

Of course, here in the US, that potential loss of control will come while we sleep, when only the Pacific Ocean is buying and selling the JPY, E minis, etc.

Personally, I believe this is EXACTLY how the great unwind will come.  And so despite how Bernanke, the current reigning super heavy weight debasement king, should be setting us up for a dollar drop, I rather think a dollar surge is at hand.  And we all know how much the S&P loves a surging dollar.  February price action in the Dixie would seem to confirm the thesis.  Gold prices seem to be hinting at this, as well.

Al Huxley's picture

No,no, you don't understand - the sun revolves around the US empire.  The Asians would NEVEReven think to instigate a real crisis off NY market hours.

Ghordius's picture

it would make Uncle Sam quite unhappy, yes - meanwhile what happens in NY is NY's fault

fomcy's picture

It Could be GOLD as well, I know it's manupulated but it's been dropping 6 month

in the row now, non stop. And keep falling, like a penny stock.

Theosebes Goodfellow's picture

Have you seen silver in the last 3 hours, (6am-9am PST)? Monkey-hammered for $.50 USD, (right on schedule)!

Xibalba's picture

Everyday.  It's USA 'policy'.

Scro's picture

All I do is buy silver, buy silver, buy silver, oh hey, another dip I think I'll buy some silver.

Big Slick's picture

Don't forget to grab a bit of Pb, Scro

Never_Put_Down's picture

...we will only find out the currencies real value after the currency crisis hits, consider the Central Banksters are all printing at the same rate and consider the chronically manipulated precious metals market and consider the chronic manipulation of oil reserves, the real value of the strongest currency could go to zero after SHTF, ushering in a new Chinese gold backed currency and the end of the petro-dollar

Dr Paul Krugman's picture

Good thing all you doomers decided to fill your pockets full of shiny rocks! Winners!

Edward Fiatski's picture

As long as the Annunaki trade me their hot alien womenz for it, I'm game.

achmachat's picture

ah yes... good thing that the USD didn't go down at all, compared to anything real, during that time.

Shell Game's picture

Good thing glue sniffers like Krudman have filled their pockets with IOUs, hope and unicorns!   FTMFW!

Esso's picture

Say, big fellah, is that a unicorn in your pocket or are you just glad to see me?

Shell Game's picture

It's a unicorn - with a very big horn...

Ivanovich's picture

That's the funny thing about Keynesian Economics.  You have to wait a while before you see the true effects of it.  I'm patient.  My shiny rocks don't degrade.

EscapeKey's picture

I would like to believe that the real Krugman would be above condensed one-liner petty arguments, but in reality, he probably isn't.

Dr Paul Krugman's picture

The fact is gold bugs are the most stubborn, mean, and unreasonable folks around. I get quite the load of hate mail and most of it comes from doomers. I understand one point of theirs, being, we are in a depression, yet how will clutching rocks help us with growing the economy when growth is based on revenue?

EscapeKey's picture

Oh, I don't know - I don't think anti-goldbugs (or anti-anything) are much better when it really comes down to it. Much debate essentially sadly ends in name-calling (I've been guilty of this as well), probably because it's easier typing in a one-liner than a reasoned argument.

But I guess it ultimately comes down to whether you believe growth is possible at this point. Debts are pretty much at all-time highs, economies are reeling at best, central banks print at an ever faster pace, and governments make rhetoric about austerity, although what we actually see is more like cutting the growth of government spending, rather than the spending itself.

Regardless, personally I don't think gold is the only asset to own if a worst-case scenario were to unfold, but historically, it's been an extremely safe asset for wealth conservation. And that's what I view it as - an insurance policy.

Xibalba's picture

People trying to protect themselves from reckless policies are not 'doomers'.  They have seen what happens all through history when Governments turn on their people.  Rome, Wiemar, Zimbabwe, Japan, etc...

DaveyJones's picture

"clutching rocks"

like in afghanistan?

I thought we were picking flowers?

yogibear's picture

Since we are in a depression and saturated with debt. We also have global labor arbitraging and an excess of cheap labor what's your Solution?

Print and the money goes somewhere. It lifts asset prices (as we currently have, oil and food). To pay for the excess of debt (pension obligations and public salaries)  municipalities increase tax and fees. We see this in CA, NY and others.

Peter Pan's picture

It is you Dr Krugman who is clutching at counterfeit money and a counterfeit notion that is destroying the world. Give gold its rightful and historical place and the world will once again trade and thrive as it did for thousands of years.

erushbass's picture

Growth is based on production, Mr Krugman.

Its better to clutch a shiny rock than a piece of paper, silly.

 

bnbdnb's picture

I'll listen to you when you shit gold.

Peter Pan's picture

Currencies are like shit. Some turds float and some sink to the bottom. But in the end they are all flushed. And so it will be with all fiat currencies by the time all is said and done.

DaveyJones's picture

don't insult shit

it can fertilize plants

Peter Pan's picture

I agree but don't try it with human shit. It doesn't work so well. Our shit is full of shit.

francis_sawyer's picture

Must be a lot of bitcoin kiosks in the UK...

Peter Pan's picture

Nothing will save the day unless human stupidity is curbed and hopefully reversed.

francis_sawyer's picture

It's time to embrace the horror that that will never happen... I'll sell you all the naked CALLS you want on that hope...

Peter Pan's picture

And which of the potential horrors are you referring to? By the way stop editing while I am replying. LOL.