The Justinian

Reuters has posted a fairly exhaustive sampling of key currency analysts’ viewpoints on how global warming will affect the FX markets.  They single out the CAD as a major beneficiary given the fact that Canada may in future provide fresh water for many major western countries and be as important in that market as Saudi Arabia currently is in the energy markets.

A sampling:

“If you put Kyoto in place, the U.S. economy would knock down the value of the dollar because of slower U.S. growth,” said Craig Russell, senior foreign exchange strategist at ODL Securities in Chicago. “U.S. commerce relies on unrestricted use of resources.

“Agricultural currencies such as New Zealand could also take a hit if extreme weather prevents crops from growing and livestock from maturing,” said ODL’s Russell. The kiwi is down 2.6 percent against the dollar in 2006.

Australia is enduring a five-year drought, the worst in a century by some estimates, with severe early season wildfires and record unseasonal temperatures.

It’s fascinating of course to think of what impact global catastrophes might have on markets, and tieing global warming with FX brings together two highly topical and fashionable subjects that are normally thought about by widely disparate groups.  Trouble is, this information is hardly tradeable, on a short- or long-term basis, and making any sort of trading decision predicated on it is pure folly.

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