The Dollar, Boomers & AI Stocks

A shortage of workers is boosting wages, but AI may soon help the economy do more with less Wages are on the rise. Even after a year of inflation-fighting interest rate hikes, average hourly earnings are growing much faster than usual. The 4.4% year-over-year increase recorded in January was far greater than the longer-term average … Continued

Dollar Days: Looking Beyond the U.S.

As the U.S. dollar declines from the heady highs of 2022, it’s time to revisit the Australian and Canadian dollars The value of the U.S. dollar soared in 2022 as currency markets followed a familiar script. This happened because the Federal Reserve delivered more interest rate hikes than any other top central bank, delivering a blistering 4.25% in … Continued

Oil, Ukraine and the Krone

Europe’s energy shortfall will boost Norway’s currency The Norwegian krone tends to rise against the euro when crude oil prices are on the upswing. Indeed, the 12-month rolling correlation between Europe’s benchmark Brent crude oil contract and the euro/Norwegian krone currency pair (EUR/NOK) exchange rate has spent most of the 14 years since the 2008 … Continued

Crypto’s Collapse Devines Aussie Dollar’s Decline

Keyword searches and risk-off sentiment in crypto suggest more movement to the short side for the Aussie Dollar Traders often default to a ticker-centric view of financial markets. “Which stock should I buy?” they ask. “Will this currency or that currency outperform this year?” It makes sense: The long-term rise of global equity markets helped … Continued

COVID-19 Redux?

News of the Omicron variant made markets plunge, but the mutated virus might buttress the dollar In the second half of 2021, investors worried about inflation and speculated on how the Federal Reserve would respond. Meanwhile, the Fed tried to allay fears of rising prices—insisting gains were merely “transitory” side effects of the COVID-19 pandemic—even … Continued

Expect a Rising Dollar if Inflation Sticks

With price growth exceeding expectations, could stimulus withdrawal be in sight? In the April issue of Luckbox, this column argued that inflation may prove stickier than the “transitory” blip envisioned by the Federal Reserve, citing a sharp rise in transport costs along frayed supply chains. At that time, the central bank’s official projections saw no … Continued

China Woes May Sink the Yuan

Look for a breakout over a pivotal resistance point That China is all but destined to overtake the United States as the global economic leader has been received wisdom for market-watchers for quite a long time now. This narrative envisions the resurgent East Asian giant in the same challenger role that the North American powerhouse … Continued

Aussie Dollar Not Finished Falling

The U.S. dollar backtracked in July as the Federal Reserve tempered expectations for when it would begin to reduce stimulus. The markets had seemingly over-extrapolated after the Fed brought forward its projected rate hike timeline at the June policy meeting. That change introduced 50 basis points in tightening in 2023 that were previously absent from … Continued

Yen Trends as Fed Eyes Rate Hikes

This writer has argued in the past two issues of Luckbox that structural factors beyond “base effects” of the COVID-19 slump in 2020 were likely to make this year’s inflation pick-up stickier than the “transitory” rise envisioned by the Federal Reserve. The Fed seemed to revise its stance accordingly at June’s momentous Federal Open Market … Continued

Fiscal Stimulus, Inflation and the Dollar’s Next Move

The recovery from the depths of the COVID-19-induced recession has gathered meaningful momentum. In fact, global manufacturing and services are growing at their fastest pace in more than six years, according to the Purchasing Managers’ Index (PMI) survey data from JPMorgan and Markit Economics. The upswell has come thanks to an unprecedented flood of fiscal … Continued