Tag Archives: US Dollar
Bank of England Quarterly Inflation report, EU GDP figures and the Australian Budget. Busy week on the currency markets! (Mike Vaughan)
Sterling started the week poorly against a number of currencies falling against the Euro and US dollar but continuing its recent resurgence against the Australian dollar. This week there is plenty of data to keep anyone with a keen eye on the money markets with some of the notable data sets as follow:
- Today 09:30 BST - Australia will release its yearly budget. This will be keenly viewed as the Australian government faces questions about its handling of the economy ahead of elections later this year. With the economy having been affected by weaker global forecasts and in particular from China, for which the Australian economy is heaviliy reliant, the outcome of the budget could be very interesting. Some analysts say that while the mining sector has been the driving force behind Australia’s steady economic expansion, other parts of the economy have stagnated or grown much less quickly. A key reason has been the strength of the AUD and the RBA (Reserve Bank of Australia) have been open in highlighting their concerns and may act to devalue the dollar, potentially good news for those buying dollars.
- Wednesday 10:00 BST- anyone with an interest in the Euro should watch out for EU GDP figures. Figures are expected to stay at -0.9% but any deviation from the expected figure and watch out for volatility on Euro exchange rates.
- Wednesday 09:30 BST – UK unemployment figures expected to stay at 7.9%
- Wednesday 10:30 BST – Bank of England Quarterly Inflation report and Mervyn King press conference. The BofE publishes a report of the detailed economic analysis and inflation projections on which the Bank’s Monetary Policy Committee bases its interest rate decisions, and presents an assessment of the prospects for UK inflation over the following two years. Watch out for any clues with regards to QE, I personally believe the Bank will stay firm on its current p[olicies until the new governor Mark Carney takes over from Mervyn King in July.
- Friday 00:45 BST – Japan GDP release, expected to show an increase from a flat 0% to 0.7%.
- Friday 13:30 BST - to finish off the week on Friday we have inflation figures and unemployment data from the US at 13:30 BST.
As you can see we have plenty of data released for the rest of the week. To be kept up to date with the impact these data sets may have for your individual requirement then please contact me and I will happily run though my forecasts and run through the various contracts we can offer to help maximise your currency exchange. I am very confident I can help achieve a better rate than your current provider. Please call the office on +44 (0)1494 787478 or email me (Mike) with a brief overview of your requirement and I will gladly contact you to help with your money exchange. I can be reached at firstname.lastname@example.org
As expected the European Central Bank cut its base rate to a record low of 0.5% from 0.75% earlier today pushing GBP/EUR close to 1.19 for the first time in nearly three months, as Mario Dragji (head of the ECB) indicated he would consider cutting rates further and could not rule out negative interest rates. The move for sterling has been a welcome relief for many and showing little sign of slowing, in fact the pound has now gained 4.3% against the single currency since its low in mid March and a very similar trend has been experienced against a number of major currencies.
Moves against the greenback and Aussie have been even more substantial seeing a shift of 4.5% since mid March against the US dollar and 5.2% against the Australian Dollar in the last month. This makes a significant difference on your money exchange and may represent a strong buy opportunity for some, however I guess the question for many is will this last?
For me I believe this could be the start of a correction for the pound, certainly against the Euro and Australian Dollar but I feel the US dollar is less clear and will remain range bound between 1.53-1.55. Those buying Euros and AUD may get more from the market and I would look for levels to head towards 1.20 for GBP/EUR and possibly 1.55 for GBP/AUD. AUD buyers should watch out for the next RBA meeting (Reserve Bank of Australia) scheduled for Tuesday next week, should the RBA Australia cut interest rates (as some analysts are predicting) we could see a further shift for GBP/AUD, I feel the RBA may also be considering further rate cuts later this year and would expect to see more value for AUD buyers in the coming weeks, particularly should China show further signs of an economic slowdown.
For those looking to buy the US dollar I would certainly consider 1.55 to be viewed as good value and feel this has the potential to move back towards 1.50, although data of late from the US has been weaker than many expected which has pushed cable close to 1.56. Tomorrow watch out of US non-farm payroll figures that are expected to show a strong increase from last month, something again that could lend support to the dollar in tomorrows afternoon session. Much of the dollars moves will come down to perceived appetite for risk and I think with the market still so jittery losses for the dollar will slow and would expect levels to shift back in the dollars favour, I would expect US dollar sellers to get more value in the coming weeks.
Should you have an upcoming trade to arrange and you would like to discuss the market in more detail and how we can help you achieve a competitive commercial rate of exchange then please get in touch. We are here to help. Please email with your particular currency requirement and I will happily get in contact to discuss your options to help you maximise your trade. Email email@example.com
Sterling exchange rates have had an interesting time of late rallying against the Euro in the wake of the Cyprus debacle (ministers meet today to finalise the bailout with some analysts suggesting the cost of the rescue may rise to €23bn) and the USD but still looking significantly out of favour when paired against the Australian and New Zealand Dollar. In fact the latter two are currently trading at near record highs against the pound a trend that may well continue in the short term and I would certainly urge anyone selling AUD and NZD to take stock of their positions whilst rates are so strong.
What’s in store for Sterling?
For me the overriding factor to determine the direction for Sterling against a host of currencies will be the avoidance of the triple dip recession. Earlier this week the NIESR (National Institute for Economic and Social Research) released its latest prediction showing revised figures of 0.1% suggesting the UK may just scrape through into positive territory as far as GDP and growth is concerned.
We will not find out the official results until the 25th April and expect market volatility in the run up to this date, but should we avoid the ‘triple dip’ then we may finally see some much need support for sterling. Of course with the result very much on a knife edge it could swing Sterling either way and continue this period of market volatility and uncertainty.
GBP/USD exchange rates
Sterling has seen a mini-recovery against the greenback having regained over 6 cents from the 1.48 lows seen this time last month. This is a near 4% swing in favour of sterling and to me represents a good buy opportunity.
Today we have plenty of data that could affect cable starting with retail sales figures at 13:30 BST and finishing with a speech from Federal Reserve Chairman Ben Bernanke at 17:30. Retail sales are expected to show a drop month on month and may create further opportunities for those clients that are in a position to take advantage.
Those looking to buy dollars may wish to avoid Bernanke’s speech at 17:30. Tuesdays FOMC (Federal Open Market Committee) minutes suggested the FED’s stance on quantitative easing could be wound down throughout the course of 2013 and should Bernanke re-confirm this then we may see the dollar recover late on, his speech may also indicate as to what future policies the FED could introduce and outline the FED’s stance on the current US economy. The old saying goes that ‘when the US sneezes the world catches a cold’, therefore any
sentiment from Bernanke is keenly viewed by investors worldwide and can cause large shifts on the money markets.
NZD at record highs
As mentioned in yesterday’s market report the Kiwi dollar has been going from strength to strength in recent weeks and in fact reached near record high over the course of yesterday’s trading. Recent trends have been attributed to improved imports from China, and in particular an increase in demand for products in New Zealand.
The moves have been quite staggering in recent years having gained in excess of 20% since March 2011 and over 10% since the start of this year. Should you have a requirement to sell NZD you will do very well to find a better time than this.
In other news…………
The Bitcoin virtual currency lost half its value on Wednesday because of a panic sell-off. From a high of $260 (£169) for each Bitcoin, the value dropped to about $130 (£84) in just six hours. The selling frenzy began as Bitcoin’s main exchange, MTGox, struggled to keep up with the volume of trade in the virtual currency. The “soaring price” of the Bitcoin has made it impossible for MT to cover what it owes to members – has the Bitcoin bubble burst?
As one if the UK’s longest standing independent currency brokers we have the ability to buy and sell nearly all major currencies but sadly for some cannot trade the Bitcoin. However shouldyou be looking at a more traditional investment such as property overseas, or emmigration, or have a substantial corporate trasnsaction to arrange then please contact the office on 01494 787478 or email firstname.lastname@example.org for further information on the currency service we can provide.
Will the UK avoid recession? The BCC certainly thinks we will…..could the pound get stronger? (Michael Vaughan)
Today has been a slightly strange day as the pound has lost ground against the majority of currencies, and in some cases quite heavily losing over 1% against the New Zealand Dollar, 0.9% against the Australian Dollar, 0.7% versus the US dollar and 0.6% against the Euro. This comes following a much needed Easter break, and although the UK is showing little sign of spring like conditions, could we be seeing the beginnings of an economic recovery to brighten up your day? Certainly the British Chambers of Commerce thinks so. In a report released this morning the BCC indicated that a strong performance by Britain’s service industries during the first three months of the year has kept the economy growing. The BCC’s survey, which included more than 7,000 firms, found that conditions for both the services and manufacturing sectors were improving, but the services sector saw some of the biggest improvements, with strong domestic sales and exports, and with Services accounting for about three-quarters of the UK economy this is certainly positive news.
Following this news from the BCC the Euro zone released their latest unemployment figures showing a record high of 12% and bringing total unemployment to over 19 million. The highest jobless rates were 26.4% in Greece, although this figure was from December, and 26.3% in Spain. This you would think would all lead to a good, positive day for the pound, but we have infact seen the exact opposite. I for one cannot see an exact explanation for the pounds losses however to me this really empasises what a volatile market place this currently is. I do feel this is a s light blip for the pound and would expect levels against the Euro in particular to remain range bound between 1.17-19, I do also feel the overall benefactor of the ongoing Cyprus debacle will be the US dollar as it gains from its historical ‘safe haven’ tag. For this reason look for a move back to 1.50 for GBP/USD and EUR/USD to move towards 1.27.
Should you have any upcoming money transfers to arrange and you have found this blog useful then why not contact us to see what we can do for you? The purpose of the site is to give you independent market views to help you make an informed decision with your currency exchange. By giving yourself as much information as possible it can put you in a far stronger position when attempting to maximise your currency exchange, allowing you to limit your exposure to adverse market movement. Should you wish to find out more about the specialist currency service we provide, whether you are a private or corporate client, then we can help. Please get in touch either on 01494 725353 or by emailing me with a brief description of your individual requirement and I will happily contact you and run though your options. You can reach me direct at email@example.com
The President of Cyprus has today announced that they will be staying in the Euro. The financial situation in the country seems to have been kept contained and Cyprus has received its EUR10bn from both the EU and IMF. After a troubled two weeks where we have seen GBPEUR exchange rates increase by 2% since March 15th when the Cypriot banks shut we could now see a sharp strengthening of the single currency against both Sterling and the US Dollar. Cyprus has avoided bankruptcy and this could be an end to the problems at least in the short term for the island so anyone with a currency transfer involving Euros should consult using a currency broker who will explain the options available and how they can save you money compared to using a bank to exchange currency.
The S&P index has closed at a record high as well as the Dow Jones following the good news about Cyprus so my feeling is that we’ll see Euro strength very quickly after the Easter break.
The US has today published positive growth figures as revised Q4 data shows the US actually grew at 0.4% compared to the previous estimate of 0.1% growth so again expect the US Dollar to have a good start to April.
If you would like to be kept updated or have an imminent currency requirement and would like more information to hep you decide when to exchange your currency feel free to email me directly Tom Holian firstname.lastname@example.org and I’m confident I can be of assistance to you.
Further gains against the Euro and USD this morning, rates have moved 3.5% against the Euro and 2.5% against the dollar in less than a week, is this the time to buy?
In what is a break from the recent norm, certainly since the turn of the year, the pound is finally finding some support with rates having rallied from a low of 1.137 to just shy of 1.18 against the single currency in a week, the trends have been similar against the US dollar moving from 1.485 to 1.52 in the same period. Regular readers of this website will have seen the coverage on Cyprus and this uncertainty is playing havoc with the Euro and US dollar, but this morning we may have also seen some signs that the UK economy could, all be it slowly, be on a path to recovery as the UK’s public sector net borrowing figures and retail sales figures were much better than expected. The government’s budget plans have been plagued by weak growth, but retail sales figures have suggested at least some temporary relief after a dismal January for retailers. Official figures increased month on month by 2.1% against the expected 0.5% showing the biggest monthly return since March 2012.
These figures will come as welcome news to many and could be the opportunity many Euro and US dollar buyers have been looking for. As a specialist currency broker we have a number of tools available to take advantage of spikes as they can often be short lived. Our aim is do maximise our clients positions and to keep them up do date with market trends. Should you have an upcoming money exchange to arrange and you would like to hear more about the currency service we proved then I would be happy to discuss the service in full. We can offer you contracts ranging from standard spot and forwards to stop/loss and limit orders, we also have a rate alert service ensuring we will contact you when a particular rate becomes available.
Anyone looking at buying Euros and US dollars in the short term may wish to take stock of their current position as these rates may not hang around for too long. Of course the situation in Cyprus will continue to cause a great deal of uncertainty. To discuss the market and your individual requirement then please contact the office on 01494 787478 or email email@example.com
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Whether you are a private client or multinational looking to buy Euros with Sterling expect little change in the coming weeks with the Bank of England appearing determined to talk down the prospects and hence the value of the pound. On Monday comments made by Martin Weale a senior member of the MPC (Monetary Policy Committee) have helped the pound continue its recent poor run as he stated the pound may need to weaken further to help make the UK exports cheaper. The theory behind this is to help give economic growth a much needed boost.
For me this policy could well continue from the Bank of England as priority for the MPC and Government will focus on avoiding the ‘triple dip’ recession. Should the UK see negative growth in the first quarter of 2013 then the UK is officially back in recession and this is something everyone would like to avoid.
I for one am hopeful we will avoid recession and as a result the pound could receive a welcome boost. We will not see see the Official figures from Q1 until April and for this reason we are unlikely, in my opinion, to see the pound gain much momentum in short term. For Euro buyers in particular it is a little concerning how strong the Euro is, even with some very poor data sets coming from the Euro zone it just shows how out of favour the pound is currently. For the next 6 weeks I can see the Euro remaining strong with GBP/EUR testing the 1.14 territory, and possibly below.
Bank of England Minutes – how could this affect my money exchange?
This morning the Bank of England will release its latest minutes from this months interest rate decision at 09:30. This release will show how the nine members of the Monetary Policy Committee voted at the Banks’ interest meeting held earlier this month and can prove very volatile for exchange rates, dependent on the outcome. For example should any of the members have voted for an interest rate hike then this could give some much needed support to sterling against most majors, in contrast if further monetary stimulus through QE (Quantitative Easing) was discussed this could have the opposite effect and the pound could continue its poor recent run against currencies such as the Euro and US dollar and AUD.
Get the best deal for US Dollars
As with the Euro gains for the US dollar since the start of the year have been significant. In a little over 6 weeks the dollar has gained nearly 5.5% – this is a difference of £10,125 on a $300k money exchange. Of course the BofE wishing to keep the pound weak will affect cable and I for one feel the dollar may well continue to strengthen and I can see a move towards 1.53 in the coming weeks, however should you be selling I would err on the side of caution as I feel we are nearing the dollars peak.
In the next three months the US debt ceiling deadline is due to expire and I for one feel the usual ‘will they won’t they’ approach from the US government will be seen. Officially if the debt ceiling is not extended then the US will be bankrupt causing catastrophic consequences to the world’s financial markets. Of course this situation is highly unlikely to happen but you can guarantee the market will price in the possibility and as result do not be surprised to see the US dollar weaken as a result. Expect a volatile period for GBP/USD
Data Watch – US FOMC minutes at 19:00 this evening. US version of Bank of England minutes and can plenty of volatility
GBP/CHF exchange rates
Still widely regarded as the one of the major ‘safe havens’ for currency investors the Swiss Franc has been making strong headway against the pound. In fact following yesterday’s moves the CHF was trading at almost exactly a 1 year high against the pound, a again of over 9% in the last 6 months. With the Swiss National Bank having taken drastic measures in the past to devalue the currency to improve their ailing exports, CHF sellers may wish to look at their options whilst rates are so strong.
Should you have an upcoming money transfer to arrange and you would like to discuss the currency service we provide then please contact the office on 01494 787478. Through using the services of a specialist currency broker clients can make significant savings, often in excess of 2% when compared to the mainstream banks. Our service is designed to take a very pro-active look at the market for our clients by utilising a number of different contracts and our ‘market watch’ service. Should you have a target rate in mind and would like me to monitor the market on your behalf then please email Mike at firstname.lastname@example.org
With the Federal Reserve announcing last night that interest rates will be kept on hold and GDP figures for Q4 2012 showing that the economy has shrunk by -0.1% the US Dollar has seen a sell off overnight. With predictions that the US would continue to grow these surprise figures have caused shock waves through the currency markets.
With the lack of confidence this has seen a sell off of USD and less appetite for riskier currencies including the Australian Dollar which has hit 1.52 this morning having tested support levels of 1.50 during most of this week. The news from America was the first time the US economy has declined since 2009 during the global recession. Tomorrow sees the release of Non-Farm Payroll data so if the news is bad again we could see GBPUSD exchange rates hit 1.60 early next week providing some welcome buying opportunities.
With GBPEUR exchange rates the lowest since the end of 2011 trading at around 1.1650 we have seen a movement of over 5% since the start of January. Ways in which to avoid losing further if current trends continue is to look at buying a forward contract which means for a small deposit you can secure an exchange rate for a future date. Clients that have purchased Euros at the start of January have already seen the benefit of using this type of contract. It is rather surprising to see GBPEUR rates at these levels as the Spanish economy earlier this week saw a decline in output of 1.8% and GDP measured at -0.7% at the end of 2012. Typically this would weaken the single currency which goes to show the precarious positions Sterling finds itself in.
Also, the Secretary of State for Unemployment in France claimed the country is ‘bankrupt’, again this would usually cause a lack of confidence in the Euro but the Euro continues to remain strong against Sterling and the highest level against the US Dollar since 2011.
The Swedish Krona has hit the lowest level against Sterling seen since 1992 this week testing levels of support at 10. This has been caused by Europe remaining strong and investor confidence high in Europe. There are talks that the Riksbank may cut interest rates next month but this appears to have been overlooked by the markets.
For further insight into the currency markets and to find out how to save money when transferring currency feel free to contact me directly Tom Holian email@example.com
Heading into the first full working week of 2013 we have a busy week in store for the pound so lets take a look at what data sets are being released and how these may affect GBP exchange rates against a host of major currencies.
Today has been relatively quiet with the pound steady against most majors (other than the Kiwi Dollar (NZD) with the pound having fallen nearly 0.4% at the time of writing). Against other notable majors (USD, EUR, AUD, CAD) the market has been very flat with less than a 0.05% spread covering them all. Heading into tomorrow we have a busy day for the Euro with Euro Zone retail sales figures, economic sentiment data and unemployment figures all released at 10:00. Forecasts are suggesting a slight increase for both retail sales and economic sentiment – however unemployment is expected to show a slight rise so this may counteract any positivity from retail sales. I would expect volatility for the GBP/EUR pairing in tomorrow mornings session and would expect a move towards 1.22.
Moving into Wednesday anyone looking at GBP/AUD should keep an eye on Decembers retail sales figures, these are often slightly over inflated due to the Christmas period but are still a good insight as to how the economy is performing. Lately we have seen a slight downturn for the Australian economy with pressure focused on the mining sector and this has resulted in a spate of interest rate cuts by the Reserve Bank of Australia throughout 2012. These figures will be keenly viewed and if released as expected may give a slight boost to the Aussie. Long term however I personally feel the AUD is over valued. I see current prices as an opportunity for anyone selling the dollar but would expect to see some better opportunities for AUD buyers in the coming weeks and months. My reason for this again stems from the falling demand for raw materials in Australia, particularly from China. The Australian economy is heavily reliant on the mining sector and ultimately this downturn is likely to have a negative effect on the dollar, I also believe the RBA will come under continued pressure to devalue the currency to make exports more attractive. As a result I can see a drive towards 1.60 in Q1 of the year. Should you have a need to buy or sell AUD and would like to get a competitive commercial rate of exchange then email firstname.lastname@example.org
Wednesday will also see a release of Euro Zone GDP. A major release that can have an impact on investors appetite and cause swings for a number of currencies, notably the Euro and USD. The USD is still classified as the ‘safe haven’ currency and should we see any improvement from Europe (figures forecast to stay at -0.1%) then we could see a drive from USD to the Euro and a weakening of US dollar exchnage rates across the board. Of course the reverse could happen should the figures from Europe prove to be worse than expected.
As we head into the latter stages of the week watch out for the first meetings of the year for the Bank of England and the European Central Bank. Both will release their latest interest rate decisions at 12:00 and 12:45 respectively. It would certainly be a surprise to see any movement from either side and likewise I would expect any monetary stimulus (Quantitative Easing) to be kept on hold. Anyone buying or selling Euros should pay close attention to the post decision press conference from the ECB scheduled for 13:30 GMT. This will see the head of the ECB (Mario Draghi) give insight to future monetary policy and it is at the point that often big swings can be seen in the market rates. Possibly one to avoid.
Finally Friday will see manufactuirng figures from the UK at 09:30 (forecast for as strong improvement that should lead to GBP rates rallying as a result) followed by UK GDP estimates at 15:00. These are released by the National Institute of Economic and Social Research, a well respected think tank and can be very accurate. They are keenly viewed and depending on the result could see big swings for the pound against all majors.
Should you have an upcoming currency exchange to arrange and you would like to discuss the current market trends and run through the many different contracts we have available to help maximise your exchange then please contact the office on 01494 787478 or email me (Michael Vaughan) at email@example.com and I will gladly be of assistance.
Where now for the pound? GBP/EUR, GBP/USD, GBP/AUD, NZD and ZAR exchange rate forecast (Mike Vaughan)
Bank of England and ECB Interest rates decision dominate this week’s data
Sterling exchange rates have continued their recent poor trend against the Euro falling close to a one month low, and very close to the lowest levels seen since June. With the Bank of England and European Central Bank both releasing
their latest interest rate decisions at 12:00 and 12:45 respectively on Thursday, and George Osborne releasing his ‘Autumn Statement’ on Wednesday, those with an interest GBP/EUR should keep in close contact with their currency broker as exchange rates can be extremely volatile in the run up and following the interest rate decision.
Historically central banks will often decide against implementingany major policies in the run up to Christmas, however by keeping in regularcontact with your broker our aim is to help our clients time their exchange by keeping them up to date with market trends. It can make a huge difference on the final cost of the currency purchase, with a £200k money transfer buying €5,100 less Euros than this time last month. Should you have anupcoming currency exchange whether this be a property completion, businesstransaction, inheritance to name just a few, then please contact the office on free phone 01494 787478 to get the best deal on your exchange.
Where now for the pound?
Mervyn King (BofE Governor) and the Monetary Policy Committee (MPC) are likely to hold the UK interest rate at 0.5% and decide against injecting further funds into the money supply, through Quantitative Easing, at this week’s interest rate meeting. As a result we may see the pound pick up back towards the 1.24 level against the Euro and move towards 1.61 against the dollar; however I would suggest Euro and US dollar buyers err on the side of caution as I believe heading into Q1 of 2013 we are likely to see more QE from the UK and this will keep pressure on the pound. As a result I would expect to see GBP/EUR heading towards 1.22 and GBP/USD to move back to 1.56/57 in the coming months.
GBP/USD above 1.60, is this a good time to buy?
The short answer to this, in my opinion, is a firm yes. These are the best levels against the US dollar in over a month and have been buoyed by the ongoing ‘fiscal cliff’ demands damaging the dollar. A move away from the ‘safe haven’ of the USD was also seen following an announcement that Spain formally requested €37bn to recapitalise its four biggest struggling lenders – Bankia, Catalunya Bank, NCG Banco and Banco deValencia. This moved EUR/USD and GBP/USD to over 1 month highs and has created an unexpected opportunity for dollar buyers.
Sterling, as I have previous mentioned, could well come under pressure later this week with the interest rate meeting scheduled for Thursday and Finance Minister George Osborne giving his “autumn statement” to parliament later this
week (Wednesday) after saying on Sunday that Britain would take longer to deal with its debt pile and that a recovery will be sluggish. Economists are speculating that the independent Office for Budget Responsibility may lower growth forecasts and also predict a target to have public sector debt falling as a proportion of national output by 2015/16 will be missed. This could endanger Britain’s triple-A credit rating and the current levels seen against the greenback could re-trace below 1.60 and beyond.
Global confidence and risk appetite
Now Spain has formerly requested a bailout this would well bring a much need boost in investor confidence and hence risk appetite. This leaves a number of currencies sitting on a knife edge. In times of market confidence riskier currencies such as the AUD, NZD and ZAR in particular will benefit and the moves can be significant. Should you be buying AUD, NZD or ZAR anytime it may prove prudent to keep in contact with your account manager to avoid any nasty surprises and an increase in risk appetite is likely to make thesecurrencies more expensive to buy.
To discuss the market trends in more detail then please contact 01494 787478 and ask for Mike. Alternatively please email firstname.lastname@example.org and I will happily run trough my forecasts in more detail and see how I can help you achieve the best exchange rate on the market.