Dollar: End of Quarter Temperature Check

June 30, 2008

It is the end of the quarter and the end to the first half of the year which has been a brutal one for many fund managers. The Dow Jones Industrial Average is down 14% since the beginning of the year and 7% since the beginning of the quarter.

As for the US dollar, since January it has weakened against every major currency except for the Canadian dollar. Its performance since April on the other hand has been mixed. The dollar is virtually unchanged against the Euro, down more than 5% against the Australian dollar and up more than 5% against the Japanese Yen.

The worst performing currency this quarter has been the Japanese Yen, which has fallen against every major G-10 currency.

Today, end of quarter profit taking has helped the US dollar recover the majority of its earlier losses. At the open of the European Trading session, the US dollar fell to fresh 25 year low against the Australian dollar. The market is clearly expecting some hawkish comments from the Reserve Bank of Australia even though rates will remain unchanged.

It is going to be a very active week for the currency market. The ECB interest rate decision and the non-farm payrolls report collide to create the perfect storm for the US dollar. What ECB President Trichet says about future rate hikes should be more important than the non-farm payrolls report, unless of course job losses are more than 100k.

Posted in US Dollar, dollar record low, euro