Line chart tracks trading regimes for euro, yen, and pound versus the dollar.
Left Y-axis: Yen per dollar (LHS); Right Y-axis: Dollar/euro and pound (RHS, reverse scale); X-axis: 2018 – 2022
- Dollars per euro begin the period near 1.2 (Jan 2018) and end it at 0.98 (end of Q3 2022).
- Dollars per pound were near 1.4 (Jan 2018) and were at about 1.12 (end of Q3 2022)
- Yen per dollar changes from just over 112 (January 2018) to 144.74 (end of Q3 2022)
Dollar weak/strong points:
- Dollars per euro: near 1.3 (Q1 2018); near 0.96 (August 2022) Dollars per pound: near 1.43 (April 2018 and Q1/2 2021); near 1.07 (September 2022)
- Yen per dollar: 102.36 (March 2020); 144.74 (September 2022)
Sources: Bloomberg and Wells Fargo Investment Institute. Daily data from January 1, 2018 to September 30, 2022.
Key Takeaways
- The euro may remain under pressure and fall further while economies suffer from punishing energy prices and as recession looms. European Central Bank rate rises may only exacerbate this situation.
- The yen may struggle to rebound as Japan is acutely vulnerable to higher fuel prices and as rising Treasury yields spur outflows. The pound may be hit hardest by stagflationary impacts of higher energy prices and a broader European slowdown, worsened by severe domestic economic and political challenges.