Brownian motion

28 July 2015 By Swaha Pattanaik Follow @swahapattanaik

Currency moves often appear arcane to outsiders. These days, insiders are also flummoxed. Plausible theories can fall apart overnight. A big problem is that traders lack conviction. They are hamstrung by patchy liquidity and reduced knowledge about market positions.

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The euro rose as much as 5 percent against the dollar in June, despite an escalating crisis which threatened to force Greece out of the euro zone. It then fell more than 3 percent in a week once a deal to avert such an exit was struck in July.

The New Zealand dollar jumped to a one-week high on July 24 after the Reserve Bank of New Zealand cut interest rates by 25 basis points to 3.0 percent, a smaller easing than some had expected.

The Canadian dollar tumbled to its weakest since March 2009 against its U.S. counterpart on July 15 after the Bank of Canada cut its key interest rate for a second time this year. The market had been split on whether the central bank would cut again.

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