Pacific Exchange Rates Report for September 9th – 12th
By: Khadija Farooqi, 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.
During the week of September 9th - 12th, the Pacific region currencies exhibited fluctuating patterns. At the beginning of the week, a general descent was observed, followed by varied recoveries. The Australian dollar (green) started with a dip but ended the week with a notable surge of 1.5%. On the contrary, the South Korean won (red), initially rising steadily, remained mostly flat but showed a slight upward trajectory by the end. The New Zealand dollar (blue) experienced the sharpest decline midweek but recovered significantly with a steep increase of 1.3%. Meanwhile, the Japanese yen (maroon) showed modest gains, peaking midweek, and then maintained an upward trend, finishing the week with an overall 0.6% rise.
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.
Throughout the week spanning September 9th – 12th, the currencies displayed varying degrees of fluctuations. Both the Australian dollar (AUD) and South Korean won (KRW) declined significantly, with the AUD dipping just below the monthly average and the KRW falling beneath its lower threshold. Meanwhile, the Japanese yen (JPY) continued its downward trajectory from the previous week, dropping further below its lower bound. In contrast, the New Zealand dollar (NZD) appears to be making a potential recovery, following a period of stability, decline, and a subsequent rebound.
Additional Reading
USD/JPY Tests 140 Key Support as Carry Unwind Continues by James Stanley
This article explores the current dynamics of the USD/JPY currency pair, which recently reached a new yearly low by dropping below the 140.00 level. This drop comes as the Federal Reserve is poised to start a rate-cutting cycle, which is likely to reduce the attractiveness of long-term carry trades. Over the past few years, USD/JPY surged from below 103 in 2021 to over 160 in July 2024, driven by rising US inflation and a series of Fed rate hikes. However, with expectations of an impending shift to lower rates, the carry trade's allure is fading. The pair is now testing significant support levels, with 139.28 and 140.00 being watched closely. As market participants await the Fed's decision, which could spark either short-covering rallies or further declines, the direction of USD/JPY remains uncertain.
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