Editor’s Note: Currency Watch provides a look ahead at next quarter, a 52-week look at high/low/last, market indices, U.S. dollar index, hazard forecast, and an overall currency report year-to-date. For a look back at earlier reports from this year and last, visit our Currency Watch archive.2014 Year End Summary
The U.S. dollar was, without a doubt, the dominant currency in 2014. Though it struggled in Q1 against major competitors: Euro (EUR), Sterling Pound (GBP), and Australian dollar (AUD), the U.S. economy rebounded in Q3 and the dollar along with it. At the close of 2014 the dollar was up 12% on the DXY Index and economic indicators suggest it will continue appreciating during the first half of 2015 against its major trading counterparts.
The Canadian dollar took a big hit in 2014, losing more than 10% to the greenback touching record lows near the 1.17 range. If oil prices continue to drop, we could see the loonie reach the 1.20's by middle of 2015.
Europe's major economies experienced dismal growth the second half of 2014 forcing the ECB to keep interest rates near zero. As a result, the Euro dropped -12% against the dollar, the Sterling Pound -6%, and Swiss Franc -11%. As the situation worsens in Greece, the outlook for the Euro will remain weak as we edge further into 2015.
Down under in Australia, the Aussie dollar has depreciated more than -7.5% to the greenback. The New Zealand dollar didn't fare much better, dropping more than -4.8% to the greenback. Both currencies will look to rebound in 2015 as the Asian markets begin to stabilize.
About the Expert: Nathan Carroll is a former professional surfer from Sunset Beach, Hawaii, who helps companies in the action sports industry manage their foreign currency risk. If you have foreign exchange questions please submit them to: [email protected]