Euro and Dollar Bloc currencies hit new highs
With the Pound Sterling strengthening to 15 year highs of US$2.00, Clerical Medical research highlights that a broad basket of currencies have also hit multi-year highs against the US dollar in the past fortnight, including the Euro, the Australian dollar and New Zealand dollar.Past Year
Dollar bloc has seen strongest performance in past year
The New Zealand dollar has strengthened the most out of the 'dollar bloc' currencies (Canadian, Australian and New Zealand dollars) against the US dollar over the past year, rising by 16%, followed by a 9% rise in the Australian dollar (the same increase as the British Pound). The Canadian dollar has been unchanged over the past year, although it has risen by 6% in the past quarter.
Euro up 8% against dollar in last 12 months
There has been an 8% appreciation in the Euro over the past year, taking the Euro to an all-time high of US$1.37, the highest level since its inception in January 1999.
But Japanese Yen falls 5% against the US dollar over the past year
Not all currencies have risen against the US dollar over the past year with the Japanese Yen slipping by 5% against the Greenback. The "Yen carry trade" by speculative investors, who borrow in Yen and then invest the proceeds in higher yielding currencies such as the Australian, New Zealand dollars and the Pound Sterling has depressed the Yen.
Small gains for Sterling against Euro and Australian Dollar
Even though the Pound has risen 11% against the US dollar over the past year, it is only 2% higher against the Euro and up 1% against the Australian dollar over the past year.
Last Five Years
US dollar weakens across the board over the past five years
The Pound Sterling, the Euro and the Yen, along with the dollar bloc, have all appreciated against the US dollar over the past five years, highlighting that recent trends have been driven by US dollar weakness rather than local currency strength.
New Zealand Dollar has gained most
The largest rise against the US dollar over five years has been by the New Zealand dollar, which has appreciated by 65% from 45.1 US cents in April 2002 to 74.3 US cents in April 2007. This was followed by a 53% risen in the Australian dollar and a 52% increase in the Euro. The Pound Sterling has risen by 37%, while the Japanese Yen has appreciated by 7%.
Mixed fortunes for the Pound over the last five years
Over the past five years, the Pound Sterling has risen by 37% against the US dollar but has fallen by 10% against both the Euro and the Australian dollar.
Clerical Medical Group Economist, Tim Crawford, said: "Not only the Pound Sterling, but a number of currencies, including the Euro, the Australian dollar and the New Zealand dollar have hit new highs against the US dollar in the past fortnight. This highlights that recent currency market moves are more about US dollar weakness rather than strength in other currencies.
Even though the Pound has risen 11% against the US dollar over the past year, its gains against other currencies have been less dramatic with, for example, only a 2% rise against the Euro and a 1% increase against the Australian dollar over the past year."
Exchange rate data sourced from Datastream.