The EUR/USD currency pair has been on a rollercoaster ride over the past year, buffeted by the hope that Western economies would somehow find the right formula for dealing with their respective debt loads and deficits while producing domestic growth worthy of recognition. Emerging markets have dominated the positive side of economic statistics for far too long, but the largest traded pair in the forex markets continues to reign supreme, as the combined strength of the United States and Europe economies still dwarfs all contenders.
The AUD/USD currency pair continues to astound the most avid observers of historical exchange rates in the world of forex. One must go back thirty years to find rates comparable to today’s market valuations, and since the year 2000, the Aussie Dollar has more than doubled in value to reach today’s rate. Often viewed as a barometer of global growth, it closely correlates with the demand for commodities and has appreciated greatly due the success of emerging markets in Asia.
The GBP/USD currency pair has correlated almost exactly with the trending behavior of its rival, the “EUR/USD”, over the past twelve months. Although the United Kingdom is independent from Europe, its banks still have many European bond securities on their respective balance sheets and export trade relationships are also entwined enough to provide additional linkage in the Pound’s tendencies versus the Euro. Favorable economic data has buoyed the Pound of late, and data releases to come may reinforce the current positive moves.
The USD/JPY currency pair, second only to the EUR/USD pair in trading volume, has been on a lengthy strengthening move over that past eighteen months, despite national disasters to the contrary. Known favorably as a base currency for the popular “carry trade2 amongst forex traders, The Yen has moved into a position of steady strength while its economy has been plagued with low growth for nearly two decades.