Let’s see. Everyone is worried about the Fed ever since Yellen brought up the possibility of a hike earlier in May and reiterated her stance last week. Just 1 hike and then wait and see.
Looking at the Eurodollar futures, we can see that expectations for hikes are lower since 1 May after last week’s testimony.
Glancing at the currencies, we note that not a single currency has gained against the USD in the past 12 months and we have a handful hanging on to the small gains they made in the past 5 years.
It looks like most major losses were racked up in recent months and all those 7 years of QE have only managed chalked up sizeable losses against the USD, some central bank engineered and others inadvertent.
My puzzlement stems from my inability to ascertain if the these ginormous moves are due to market positioning, central bank currency wars or economic weakness.
The Economist thinks that Norway, South Korea and Australia have the most wriggle room and the best chances of handling another crisis.
Yet is is not complete unless we have the elements of growth and the current account thrown in. Thus I compiled a table for comparison mapping the 1 month change in currency against the USD, budget and current account totals, central bank, GDP forecasts for 2015 and 2016, 2014 FDI as a % of GDP, REER YoY change and could not resist throwing in the Corruption Index rankings.
