Chuck Butler’s Currency Round Up
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Aussie dollar heading to parity… Swedish krona/Norwegian krone poised for rate hikes… Canadian loonie bounces as commodities soften… British pound turns to the dark side…
Yesterday, I told you how the Aussie dollar’s recent economic data had softened and the thoughts that the Reserve Bank of Australia (RBA) would end their rate hike cycle. These thoughts had stopped the Aussie dollar’s potential rise to parity on the back burner… But, not anymore!
Last week, the Swedish Central Bank, Riksbank, raised interest rates 25 BPS… This was lost in the shuffle of the U.S. Holiday, and all the stuff that happened on Thursday. Well, this morning, Sweden announced that the CPI had risen again to 3.2%, matching a 15-year high. Thus, we could see the Riksbank back at the rate hike table in the future… The Swedish krona has had a very nice performance so far this year, as it is up slightly right now, but was up much more before last week’s sell off of the euro, which took the “little dogs” along for the ride… I would continue to look for Sweden to push the envelope VS the dollar, along with its kissin’ cousin Norway.
Speaking of Norway, their inflation rate pushed to a 6-year high at 2.4%… I would think Norway’s Central Bank, Norges Bank, will also revisit the rate hike table this year… But, these two might be too closely aligned with the euro right now, and thus, as the euro goes, so goes these two…
The Canadian dollar / loonie, pushed even higher yesterday, as is now knocking on the door to 99-cents… This is such a strange move by the loonie, in that it couldn’t buy a bid when Gold was $935 and Oil $145… But now that these two commodities have softened, the loonie catches a bid… Strange, but true…
U.K. pound sterling has really seen the dark side of all the bright lights that shined on the currency about two weeks ago… Recall, that then, traders believed the Bank of England (BOE) would reverse their rate cut, and pound sterling traded at $2 again… Ever since then it has been in sell off mode, and last night was no different as House prices keep tumbling… It was reported that U.K. house prices fell by 2.0% during June, and were down 6.1% in the last quarter. As I said the other day, the BOE has painted themselves into the same type of corner as their brothers-in-arms at the Fed… The BOE can’t raise rates to fight inflation, and they can’t drop them either as the economy teeters…
Source: Aussie Job Creation Soars!
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Tags: Australian Dollar, British pound, Canadian Dollar, Chuck Butler, euro, US dollarAbout the Author
Chuck Butler, is the author of The Daily Pfennig, which is republished at The Daily Reckoning. His respected analysis is frequently quoted in or referenced by: the Wall Street Journal, U.S. News and World Report, CBS Market Watch, USA Today, CNNfn, the Chicago Tribune and many other publications.
The Daily Reckoning offers a "uniquely refreshing" perspective on the global economy, investing and the ability to live well in uncertain times. You will learn what you can expect from today's markets and how to prosper in the face of uncertainty.