Markets
The World's Major Currencies Have Lost a Fundamental Anchor
An unmooring in markets that may be contributing to global nervousness.
What's Going On in the Currency Markets?
This article is for subscribers only.
The world's major currencies are adrift after decoupling from one of their most important fundamental drivers—interest rate differentials on short-term sovereign debt.
"Basic economic theory holds that interest rate differentials are responsible for changes in exchange rates over time," wrote analysts at Bespoke Investment Group. "Currently, a number of global FX pairs are seeing sharp divergences between recent FX differentials and their spot levels."