The tumbling trade-weighted dollar is one of the surprise stories of the year so far as many analysts thought the greenback would fare better than its freely traded rivals due to an improving U.S. economy and a central bank that was reining in its money printing effort while prepping financial markets for higher interest rates.
But that’s not what has happened as detailed in this story at CNBC.
After years of tough love from policy makers and central bank officials, the eurozone may finally be on the road to recovery despite perpetual warnings of deflation (either that, or bond bubbles in places like Spain and Greece are contagious). The euro is now near $1.40 for the first time since it looked like the U.S. government was going to implode in 2011.
Also (and this took me by surprise when I looked it up), thanks in large part to a blossoming housing bubble, the British pound is threatening $1.70 for the first time since 2008!
It’s not clear what any of this means, but it sure has taken a lot of people by surprise.