Mirror, mirror on the wall, who’s the fairest currency of them all?

Posted by on Jun 6, 2012 in Commentary, Featured

Mirror, mirror on the wall, who’s the fairest currency of them all?

It’s been an interesting few days. Friday started with gloomy news from the UK manufacturing sector. GBP unloved as the UK remains recession bound.

Then the news from the USA. Non-farm payroll figures upstaged the UK in their disappointment. Cue USD joining the ugly currency parade. So now we have EUR, GBP and USD in this parade.

The Swiss National Bank decided a while ago to limit the value of the Swiss Franc by linking it to the value of the Euro. The setting of a “floor” rate of exchange effectively fixes the value of the Swiss Franc, so better add CHF as well.

With four of the five major currencies in the parade, that leaves the Japanese Yen. Rumours circulated that the Bank of Japan were buying dollars and selling yen in the market to stabilise the value of the yen. Further intervention to weaken the yen cannot be ruled out.

The great mining economies Australia and Canada are affected by China. The rate of slowdown in China is not proving supportive to either AUD or CAD, although the reduction of interest rates in Australia lifted the currency a little.

At some point, further economic stimulus through the printing of money seems inevitable, certainly in the UK and probably in the USA. This ties back to my previous post where I asked “What is a Euro worth?“.

I’ve placed trading on the back burner for a couple of days. Instead, it’s been an amazing short break celebrating the Queen’s Diamond Jubilee. Cheers.