Currency Update for Steel Trading Nations

Currency markets have been anything but stable since our last update on January 25th and this shows up clearly in our examination of the currencies of the steel trading nations. Expectations of four rate hikes by the FOMC seem to have flown out the window. On February 3rd Josh Brown wrote, “Perhaps the biggest headline of the day was with the US dollar, which got hit with its worst one-day loss in seven years. There was no clear catalyst for the massive loss. I haven’t even seen many plausible theories. If I had to guess, the dollar dropped because many people were betting on the dollar going higher with all the promised rate hikes. And now that there won’t be any more hikes, everyone suddenly realized they should unwind their dollar longs, and as soon as momentum turned negative, it developed into a feeding frenzy. Again, though, I can only speculate. Massive moves like that are usually driven by some huge economic event or unexpected Central Bank action. A 7-year biggest decline totally out the blue? Let’s just say the markets are on edge.”