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Name The Worst-Performing Currency Of The Year
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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All of them
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.
Only if you consider public debts.
If taking into account all debts - including household, business and financial - the UK reigns supreme!
Great Britain indeed!
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?
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
you mean we live in physical world?
But of course, Tbills are the safest asset. Or so I hear.
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.
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?
Sandmann, how dare you to flaunt dirty facts against the words of brilliant people like Wolf and Carney
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.
LMAO!
A discussion on the best looking horse at the glue factory!
Gas prices ...
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.
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.
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.
it would make Uncle Sam quite unhappy, yes - meanwhile what happens in NY is NY's fault
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.
Silver
Have you seen silver in the last 3 hours, (6am-9am PST)? Monkey-hammered for $.50 USD, (right on schedule)!
Everyday. It's USA 'policy'.
All I do is buy silver, buy silver, buy silver, oh hey, another dip I think I'll buy some silver.
Don't forget to grab a bit of Pb, Scro
...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
Good thing all you doomers decided to fill your pockets full of shiny rocks! Winners!
As long as the Annunaki trade me their hot alien womenz for it, I'm game.
ah yes... good thing that the USD didn't go down at all, compared to anything real, during that time.
Good thing glue sniffers like Krudman have filled their pockets with IOUs, hope and unicorns! FTMFW!
Say, big fellah, is that a unicorn in your pocket or are you just glad to see me?
It's a unicorn - with a very big horn...
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.
I would like to believe that the real Krugman would be above condensed one-liner petty arguments, but in reality, he probably isn't.
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?
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.
growth is 'jewish' for debt
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...
"clutching rocks"
like in afghanistan?
I thought we were picking flowers?
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.
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.
Growth is based on production, Mr Krugman.
Its better to clutch a shiny rock than a piece of paper, silly.
Drunk Ass Party is back!
I'll listen to you when you shit gold.
Fig Newtons
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.
don't insult shit
it can fertilize plants
I agree but don't try it with human shit. It doesn't work so well. Our shit is full of shit.
Must be a lot of bitcoin kiosks in the UK...
Nothing will save the day unless human stupidity is curbed and hopefully reversed.
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...
And which of the potential horrors are you referring to? By the way stop editing while I am replying. LOL.
The horror that 'human stupidity' will never be reversed... But I suppose you could toss in BITCOINS while you're at it...
~~~
On a more serious note [to all bitcoin freaks]... I'm not against the PHILOSOPHY of bitcoins... I just can't see it becoming fully OPERATIONAL on a mass scale [too many obstacles & limitations]...
While not a perfect analogy, I'll offer the following:
- I believe that BITCOINERS see the evolution as being somewhat to evolution of PC's into mainstream usage ~ or the internet & smartphones
- Instead, I see it more like DIRECT CURRENT [whereby ~ ALTERNATING CURRENT was the easier way to go until the REAL Tesla Coil gets uncrated from the box in the warehouse where they put the Ark of the Covenant at the end of the Indiana Jones movie]
~~~
IOW ~ Thomas Edison would have probably loved bitcoins... Nikola Tesla ~ prolly not...
From a purely technical perspective, the $ is due for some sort of retrace starting in the next few days. Unfortunately we can't use technicals because of the sequester tomorow.
Early next week will be very revealing. I just closed my last open trade. I'll just sit back and watch the [Kabuki Theater] for a few days , unless an obvious trade reveals itself.
The Euro has been in a slide from 1.37. Sits at around 1.30.
http://bullandbearmash.com/chart/euro-daily-declining-sharply-channel-su...
Headed for below 1.20.
Get to work Mr. Chairman.
Yes, get to work Mr. Chairman!
Forward with the strong dollar policy!
For a fully financialised economy like the UK Currency Depreciation makes no sense. A financialised economy needs a Hard Currency as a store of value. That they drive the Exchange Rate down and have no real industrial base or Export Elasticity but high Import Inelasticity shows just how bankrupt policy-making in the UK really is. They have ZERO ability to influence the Terms of Trade. All they do is erode real incomes and impose an intense squeeze on households and businesses by inflating Energy Prices, driving up Food Prices and running a hyper-loose high-powered monetary policy restricted to Banks and having a credit squeeze on households and SMEs.
It is the most bizarre Economics I have ever seen and suggests sclerotic minds or simply Men who haven't a clue
You are absolutely right Sandmann. +1
Sandman is right, but the UK economy no longer exists for the benefit of its people. It is there to serve the interests of the City of London and the vested interests that operate there.
They have a clue. They know exactly what they're doing - the masters they serve are not the ordinary UK public that elected them.
They'll see us all starve, freeze and die from poverty before they will do anything that would endanger their friends in the financial services, energy corporations etc.
No, you're giving The City too much credit. Our biggest exports are weapons and drugs.
(There's a reason we're portrayed as the bad guys in movies always.)
Paper.
They need an excuse for the Q1 misses. Then they can project the dollar getting weaker, and future earnings will hockey stick up - just one more quarter further in the future.
Doesn't surprise me that GBP is the big winner here.
When we talk about austerity in the UK, I wonder WTF they are talking about. When they talk about cutting back on public sector spending, I look at the figures and guess they must be smoking too many exotic cigarettes in "the house". When they talk of cutting social security benefits, I know that's just newspaper talk.
When I look how many EXTRA euros my holiday this year is going to cost since I booked it I KNOW things are not what they seem,
When I hear, as expected in some quarters, an ex-Goldmanite is about to run the UK economy, I KNOW we are in the S H 1 T.
When the Labour party get re-elected, the circle of doom is complete and we will have to devalue the £ by 50% to get out of this mess.
The only fly in the ointment is that the US will collapse first and spoil the party.
You know how gold is down?
It's not.
Not for those of us in GBP land anyway. I've given up on the pound and am using gold as my base currency now.
Abe San is a mere amateur in the currency destruction game,a little begginers luck has already put him in second place behind the real experts in devaluation - HM Goverment and the Bank of England.
He has been reported by the worlds media as wanting to totally destroy the Yen,and in the process removing the autonomy of the Bank of Japan governor and appointing a replacement who has been appointed on one condition and that is to destroy the Yen,and in just three short months the Yen is knocked into second place as the worlds worst currency by sterling.This is without any overt policy by the Bank of England or official devaluation being announced.Like a subtle raising of an eyebrow by James Bond, a hint or a few well chosen words here and there by a Bank of England official or Treasury Minister can send the pound down with more force than the entire Japanese government can achieve by screaming from the radioactive rooftops of Tokyo.Long term followers of sterling know that the solution to every crisis encountered by the UK government in the last 100 years is met by one response,and one response only - devaluation,hence the attention paid to signals from government officials.
Imagine what the UK government can achieve if it REALLY wants to devalue sterling!(Enter Mark Carney stage left)and here we have the next stage of wealth destruction UK stylee.Carney will devalue sterling by at least 50% and that is just for starters,if that doesn't work there will be further QE and devaluations and regular press briefings to ensure the whole world understands that "growth" i.e. the reumption of lending to fuel the housing market will be pursued at any cost to savers and holders of sterling.
Actually, the British Pound has been the worst performer since late October 2008.
Nothing new to see here.