Coinciding with currency wars – Rebasing charts

We all know that the euro is plummeting, it’s status as the most hated currency in a long time well established.  But what’s it doing relative to other currencies around the globe?  When some are quoted as US dollars per unit of currency, like the euro, and others as currency per US dollar, like the Japanese yen, how can we compare this frankly motley lot?

We use Rebasing charts.  These compare percentage moves over a chosen time period.  We have two examples here, both starting in July 2014 because that was when US dollar strength really kicked in.  Both start with all currencies valued at a nominal 100 and then plot how much each has, in this case lost in value, as a per cent up until today.  The first chart includes the euro (-23%), sterling (-13%), Australian )-20%) and New Zealand (-17%) dollars, plus Canadian futures prices (-17% too) as all are quoted as dollars per unit of currency.  Depending on your point of view top dog is the single currency and the pound the laggard – or vice versa.

The second chart is a more diverse lot where the biggest loser, and possibly a surprise to many, is the Norwegian crown (-33%), then the Swedish one (-29%), the yen (-19%) and Swiss franc (-13%).  In case you are not aware the purple line labelled ZAR is the South African rand.

This type of chart is brilliant for comparing the performance of related securities and ties in with the analysis of the speaker at last week’s STA meeting (please see video in the Meetings Video section).

Rebasing Chart 1

Reuters rebasing chart

Rebasing Chart 2

Reuters rebasing chart

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About Nicole Elliott

Nicole Elliott

A graduate of the London School of Economics and Political Science (BSc Social Psychology) Nicole Elliott has worked in banks in the City of London for the last 30 years. Whether in sales, trading or forecasting technical analysis has always been the bedrock of her thinking. Key expertise lies within all areas of treasury: foreign exchange, money markets, fixed income and commodities.

She has also added to the body of knowledge of the industry writing the first western book on Ichimoku Cloud Charts. Strong media links and a cult following are due to her prescient calls on the markets and often entertaining format.

Nicole can be contacted at trending@sta-uk.org

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