For a stark assessment of global recession risks, look beyond the world's top currencies to the pronounced declines for their less-well-traded peers.
The Australian and New Zealand dollars, which trade as proxies for Asian growth because of their commodity exports, are bumping along at some of the weakest levels since the aftermath of the financial crisis. The tumble for Norway's krone and Sweden's krona takes them to lows dating back further still, almost to the start of the millennium.
It's a reflection of the deepening prospect of a global slowdown at the same time as investors are unnerved by souring economic data, signs of stress in money markets and the rumbling risks of Brexit, trade wars and a US Presidential impeachment. The clincher is that confidence is fading in the ability of monetary policy to boost struggling economies, leaving growth-linked currencies particularly exposed.
"We remain skeptical that central banks, in the absence of a trade agreement, have sufficient firepower to drive meaningful gains in the market," says Mark Haefele, chief investment officer at UBS Global Wealth Management. "Global trade tensions which have weighed on growth sentiment in Asia should hurt the Australian dollar." He's underweight the Aussie versus the US dollar.
The plunge in growth-sensitive and commodity-linked currencies has taken them to levels unseen in a decade, highlighting a trend that is both deep and broad. With monetary policy likely to stay accommodative globally, the chances of deeper rate cuts from the Federal Reserve failed to prevent the flip side of the trade -- gains for the dollar that have sent Bloomberg's gauge of the currency's strength to a two-year high. It's within 1% of that mark despite a string of weak US economic data this week.
Australia's dollar is trading around levels last seen in 2009, during the global economy's recovery from the financial crisis, as is the New Zealand dollar. The Reserve Bank of Australia cut rates earlier this week, confronted with rising unemployment. The currency has been sensitive at times to both the outlook for growth in China and base metals prices, due to the size of the country's mining sector.
It's a slump compounded by sustained weakness for China's currency. The yuan trades at over 7.1 per dollar and weakened as far as 7.2 in September. That has attracted criticism from the U.S. administration, adding political ammunition to the trade war between the two countries, one of the main drags on growth.
The weak points for Scandinavian currencies go back even further. Norway's natural resources mean the krone is closely tied to oil prices, while Sweden's krona reflects the country's ties to global industry and trade. As the chart below shows, the dollar has reached its highest levels against both since the early part of last decade.
The lack of traction for monetary policy comes as the cost of borrowing dollars rises alongside the popularity of deflation trades which bet against central banks winning the fight for growth. There are other macro-level risks in the air, not least the threat of a disorderly Brexit. Fall could prove to be a season that matches its name for a range of riskier assets across global markets.