Pacific Exchange Rates Report for September 30th – October 11th
By: Gabriel Kukulka, The Quinnipiac University Economics Research Team
Pacific 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.
Between September 30th and October 11th, all four tracked Pacific currencies strengthened against the U.S. dollar. The Japanese yen (maroon) led the gains with a substantial 4.4% increase, followed closely by the New Zealand dollar (blue), which rose by 4.2%. The South Korean won (red) experienced a 3.0% rise, while the Australian dollar (green), though posting the smallest gain, still saw a notable 2.8% increase. With all four currencies rallying at the beginning of October, it will be interesting to monitor whether this upward momentum continues throughout the rest of the month.
Pacific 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 first two weeks of October brought a sharp spike in Pacific exchange rates, marking a significant reversal of a trend that had persisted for the past three months. Since August, the Australian dollar, Japanese yen, South Korean won, and New Zealand dollar had all been in a steady decline. However, as October began, this downward trajectory shifted dramatically. The yen, won, and New Zealand dollar have now surged to levels last seen in mid-August, while the Australian dollar has reached highs not observed since September. This swift and unexpected rise highlights a notable divergence from the currencies' recent downward trends.
Additional Reading
The article discusses the relationship between U.S. Treasury yields and the exchange rates of both the U.S. dollar and Japanese yen. It suggests that recent downward trends in the yen's value may require intervention from the Bank of Japan or the Japanese government to correct. Additionally, the impact of Hurricane Milton in the U.S. could influence the labor market, which in turn could affect the yen's exchange rate. Changes in employment and economic conditions in the U.S. might lead to fluctuations in Treasury yields, thus impacting the currency dynamics between the U.S. dollar and the yen.
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