Trans-Atlantic Exchange Rate Report for February 5 – February 9
By: Ryan Slattery, The Quinnipiac University Economics Research Team
Trans-Atlantic Currencies Index
Source: Yahoo Finance and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency) and then indexed to be 100 at the start of the period.
From February 5th to February 9th, all Trans-Atlantic currencies weakened against the US dollar. The currencies moved nearly in unison throughout the week, although with different magnitudes in their changes; they opened the week with two days of decreasing value against the USD, followed by a slight midweek rally and a fairly stable Friday. The Canadian dollar (red) had the strongest performance, falling by 0.2% by Tuesday but recovering much of that throughout the rest of the week, closing down by only 0.06%. The Swiss franc (maroon) saw the worst performance this week, falling 1.5% by Tuesday with a weak rally on Wednesday. It fell a further 0.5% on Thursday, ending the week having lost 1.8% of its value. The Euro (blue) experienced a drop similar to the Canadian dollar’s but did not regain quite as much, finishing down by 0.9%. The British pound (green) was the most volatile currency this week, experiencing the greatest losses early in the week but also the strongest recovery. Ultimately, it lost 1% of its value compared to the start of the week.
Trans-Atlantic Historical Trends
Source: Yahoo Finance and own calculations. Exchange rates are inverted to be USD per local currency (i.e., an increase indicates a stronger domestic currency. The center line is a rolling three-month average. The upper and lower boundaries are the average plus and average minus one standard deviation, respectively, for the same three-month period.
The weakening of the Trans-Atlantic currencies this week is reflected in their three-month rolling averages. The Canadian dollar (CAD) crossed below its average this week, although it did return above it by the end of the week. The Swiss franc (CHF) also fell below its average and remained there. The Euro (EUR) fell from its average to its lower bound this week; its value has not been this low since early December. The British pound (GBP), which hovered near its upper bound last week, fell to and briefly crossed its average. It now lies slightly above its average, marking a low that has not been seen since mid-December.
Here's an article from Yahoo Finance that discusses the Fed signaling it will not raise rates despite slightly higher-than-expected inflation.