USD Exchange Rate Report
Week of January 30 – February 3, 2023
By Luke Brown, Quinnipiac Global Economic Research Team
Edited by Chris Ball
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.
For the week of February 6 – February 10, 2023, all major currencies weakened relative to the United States dollar. The Japanese yen (maroon) and Australian dollar (gray) featured the largest drop in value. The JPY dipped down nearly 3%, at its lowest, but finished the week down about 2% along with the AUD. The Canadian dollar (red), Swiss franc (yellow), and British pound (green) weakened the least, finishing approximately 1% lower. The euro (blue) finished down 1.5%, between all the other currencies.
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.
For the week of February 6 – February 10, 2023, most currencies have continued to weaken relative to their three-month rolling average. The British pound (GBP) and the Canadian dollar (CAD) saw the steepest fall starting the prior week and are currently sitting just above their averages. All other currencies are sitting one half to one standard deviation higher than their averages, but this is down a bit from their highs in recent weeks.
It is not clear what is driving these patterns, but one explanation of the recent, widespread weakening relative to the USD might be he recent rate hike by the Federal Reserve. During their most recent FOMC meeting (Jan 31 – Feb 1), the Fed announced that they would raise the federal funds rate by 0.25%. Recent robust job reports suggest the Fed is more likely to maintain higher rates longer and even raise rates further in the coming months.