Category Archives: AUD
Will sterling continue to climb in the New Year or fall against its peers? This is a very valid question at this time and with rates at such interesting historical levels begs the questions, what will happen towards the end of the year?
The most important day for sterling is probably tomorrow with the Bank of England Minutes form their latest interest rate setting meeting plus Unemployment data also released. The rate has held fairly firm at 6% on the Unemployment rate which is encouraging as a sign of the UK economy finally getting back on track. The rate had however been falling and it might be that with other economic data showing not such great performance any lack of improvement in the figures is seen as damaging for the buoyant pound.
This really does appear to be the most important event on the calendar this week and before the end of the month so if you are considering moving sterling not just before the end of the year but also in 2015, it really might be sensible to make some careful plans now. Two years ago sterling was at 1.25 against the euro approaching Christmas before falling to 1.14 by February and March!
By making us aware of your transfer and any possible target rates we can work together to try and help you get the most from the market. Should you wish to learn more please contact me Jonathan on email@example.com. Merry Christmas!
The Pound flirted with the 1.25s today seeing a day low of 1.2570. This has been a welcome opportunity, subsequently taken advantage of by Euro sellers – these have been the best prices seen for just over two weeks. Sterling rebounded swiftly however as just after midday, the European Central Bank (ECB) announced that the cheap loans made available to European Banks had not been fully utilised. This therefore leaves the markets expecting the ECB to have no choice but to proceed with full ‘Sovereign Quantitative Easing’. QE is generally seen as negative for an economy so the fact that comments reinforce its inevitability push GBP EUR closer to 1.30.
Prediction – GBP EUR to hit 1.29 before the end of 2014
Sterling Aussie made strong gains at a similar to GBP EUR gains on the back of comments from Reserve Bank of Australia Governor Glenn Stevens. Stevens publically announced that he thought AUD was very overvalued, up to 10 cents overvalued against USD! This pushed GBP AUD north of 1.90 and will close the day there or there about. On 26th November my colleague Daniel Wright predicted 1.90 within the next few years – it appears he was spot on!
Sterling Rand has hit 18.29 for the first time since July – Is it the spike to take advantage of…
Feel free to contact me direct to the trading floor – 01494 787 478 – AJB@currencies.co.uk
If you need to make some currency exchanges in the New Year involving the pound, you should be very much aware of some volatility expected on exchange rates. It is important to note that making firm predictions is impossible but just like we predicted in the Spring sterling would rise against the major currencies towards the middle and end of the year we can now make a prediction in the New Year sterling is likely to fall. We cannot tell you exactly how much by or which date but falls of up to ten cents on GBPEUR and 15 cents on GBPUSD wouldn’t be completely out of the question.
How can you make such a forecast? Well primarily I am basing this one major event, that is the General Election. Political Uncertainty and Economic Uncertainty are two key reasons to sell the pound today. These two factors are likely to combine and undermine much of the confidence we have seen behind sterling in 2014.
Economic Uncertainty – The sums don’t add up. The UK is still spending much more than it receives in tax receipts which is ballooning the public debt. Much slower growth than forecast will obscure the Chancellor and the OBR’s (Office of Budget Responsibility) plans for the economy to heal itself through more tax income. The Eurozone is slowing down, China and the global economy are slowing down, where exactly will all this growth come from? The current plans set out by Mr Osborne some 4 years ago were well received by markets at the time but how much patience is there? How long will workers and business stand by the current government with no real signs of the improvements promised and discussed?
Headlines surrounding the lack of any major economic progress by the government are likely to dominate the New Year and this will in my opinion combine with Political Uncertainty to fuel a sell off on sterling.
Political Uncertainty - It is very rare the government of the day increase their share of the vote when challenging for a second term. This is because it is more than likely the government has lost popularity by nature of being in government and the opposition can pick holes in their abilities. The Tories whose laissez faire approach to economic policy is generally the favoured approach by the markets (versus the uncertainty of Labour getting us in more debt) will likely lose their hold on parliament and require further support in the form of another coalition. Will it be the Liberal Democrats? Unlikely, they have lost swathes of support in the UK. Will it be UKIP? They plan to leave the EU immediately which in the short term at least would be terrible for UK plc as business and government has to completely renegotiate international relationships.
The Tories are also talking about an in or our referendum on Europe. The prospect of the UK leaving the EU is potentially disastrous for the UK. Attitudes towards the UK as a centre for global business will deteriorate and we will, at least in the short term suffer from a loss of inward investment.
Labour’s economic plans are not well thought out and involve some fairly draconian measures which will ultimately limit competition and drive investment overseas.
When you look at how sterling reacted to the Scottish Referendum in September we are reminded of the potential for political and economic uncertainty to affect markets. If you need to make a transfer involving the pound in the New Year making some plans now might well be a wise move because what is very clear is that the market shave not yet factored in any of the issues outlined above as of yet. Whether this trend manifests in January or the week before the election is impossible to say. But holding on to find out is the risk and with the pound at such great levels compared to averages of the last five years, it would appear any decision to hold on too long may become very costly.
To keep up to date with market ‘spike notifications’ and ‘rate alerts’ or for a personal forecast for your situation please contact me Jonathan on firstname.lastname@example.org
GBPEUR has fallen from 1.2755 as the high today back down towards 1.2637 as Mario Draghi disappointed on the big Eurozone ‘QE’ question. In fact what we saw was him refrain from announcing a full blown QE operation. This caused the Euro to strengthen and I think represents a good opportunity for anyone selling the Euro in the future. Longer term it does seem very likely that the Euro will be weaker against the pound, on balance if you are buying sterling with Euros buying on the dips is the best way to maximise your transfer.
The big gamble on GBP rates in 2015 is going to be the election. It would not be surprising to see an increase in voter apathy and the old 2 or 3 way party system split yet further. If you have any major transactions in the New Year making some careful plans now might be a very good idea. We offer a range of contract options including the option to fix prices for the future and trade automatically at certain higher or lower rates. A quick discussion with us over the best strategy to maximise your deal really might be best the course of action. Just look at the high to low movements today! A well placed order could really make a big difference in rates on a large volume of currency.
If you wish to learn more please contact me Jonathan directly on email@example.com
Sterling has made good gains against the Euro this morning, as European ‘Markit’ services data came in lower than expected. On the flip side, UK ‘Markit’ data came in better than predicted, pushing the mid-market to within touching distance of 1.27.
The UK is waiting on George Osborne’s Autumn Statement due at 12:30 this afternoon. Osborne is expected to target specific politically linked subjects, in order to sway voters towards the Conservatives for the General Election in May 2015. Policies regarding stamp duty tax reduction, personal tax allowances and a funds injection to the NHS are expected. Osborne is looking to take the focus away from the fact the public borrowing is still very high and that £75bn is the figure still expected to be borrowed.
If you act swiftly, you may be able to secure an exchange prior to the statement, which in my opinion would be wise. Rates are close to 3 year highs and with the potential for major movements it may be worth ‘taking the money and running’!
The EU releases its Monetary Policy Statement tomorrow, with Mario Draghi expected to release his plans to stimulate the EU economies. The Eurozone is incredibly stagnant, with many economies barely avoiding recession. It is expected that Draghi will release potentially extreme plans to kick start the Euro, so the Euro may weaken from early tomorrow morning. Those buying Euros who either miss the current buying window, may look to see how the market moves tomorrow to take advantage. If I were selling Euros, I’d get them exchanged immediately as the future looks bleak!
Australian GDP Drops
Australia released its month on month and year on year GDP figures – both have dropped. This is not a good sign for Australia, but has been expected. The Australians main export is Iron Ore, feeding the Chinese economy and their steel production. The Chinese have slowed production quite substantially, hence the reduction in Iron Ore required. GBP AUD has spiked to over 1.86 today, fuelling the speculation that we will see 1.90 on the markets before the end of the year.
South African Rand – Buy Time Now?
GBP ZAR has spiked 0.7% today, providing ZAR buyers a good opportunity to buy north of the 17 mark. Commodity and riskier currencies are weak at the moment as investors flock their money to stronger safe havens (E.g. USD), now may be the time to take advantage…
Finally, the week is closed by US Non-Farm Payroll data at 13:30 on Friday, an incredibly volatile data release. Non Farms are very hard to predict so do make sure that you have considered your position in the market.
Please feel free to contact the trading floor directly on 01494 787 478 and ask for Andrew Bromley. I am also contactable on AJB@currencies.co.uk
Sterling exchange rate latest – Economic data due out soon that may cause volatility (Daniel Wright)
The Pound has dropped against most major currencies during trading today, however we have seen a positive movement for Sterling against both the Norwegian Krone and Canadian Dollar.
The Pound in general appears to have fallen slightly out of fashion this week but anyone looking to buy either NOK or CAD in the coming days or weeks will have been pleased to see a decision from oil ministers to keep their output target unchanged. With oil prices being key to both of these particular currencies this news weakened both off with the Canadian Dollar losing roughly half a percent and Norwegian Krone losing over 1%.
We have plenty of economic data due out in the coming few days, first and foremost we have consumer confidence figures due out for the U.K which are actually released shortly after midnight. Consumer confidence is a measure of the general feeling of consumers and a positive figure may give the Pound strength yet negative may lead to quite the opposite.
Tomorrow morning is key for those that have the requirement to either buy or sell the Euro as we see inflation figures released at 10:00am. Inflation has been one of the key talking points during European Central Bank interest rate decisions and the press conference shortly after as there had been a fear of deflation which did lead to head of the ECB Mario Draghi taking fiscal action.
Later on in the day we have Canadian growth figures which may either give the Canadian Dollar a chance to recover or kick it whilst it is down. Expectations are for a positive figure but as regular readers will know the market is here to surprise us.
Over the weekend we also have an extremely important vote surrounding Switzerland which may have an effect on the Swiss Franc and the price of gold. A great overview of that can be seen by clicking here.
If you have foreign currency exchange in the coming days, weeks or months then it may be well worth you getting in contact with me directly. You can email me on firstname.lastname@example.org with a brief description of what you are looking to do and a contact number and I will be more than happy to call you personally. I would be extremely surprised if I could not better any exchange rate that you have already been offered.
Happy thanksgiving to our friends over in America – I look forward to speaking to you soon.
Currency Forecast 2015 – Knowing what may happen in the future allows you to free up time and limit your risk…
The pound has been one of the best performers of 2014. Will this be the case for 2015? I have to say for the earlier part of 2015 it looks highly unlikely as a very uncertain General Election should cause GBP weakness. We saw this with the Scottish referendum in September. It is not just the outcome here that is important. Business confidence will be significantly lower as both international and domestic businesses alongside individuals refrain from key decisions owing to the uncertainty. This election will be fought and possibly won or lost on the European question and this will greatly unsettle financial markets which in my opinion have failed to so far price this important event in.
Generally speaking the raising and lowering of interest rates causes a currency to fluctuate. If a central bank actually raise rates (or market observers think they might in the future) the currency should strengthen. If there are thoughts that they will lower rates the currency will weaken.
Applying this to the UK, expectations for most of the summer the bank would raise interest rates caused the pound to spike. Remember currency markets move on rumour and speculation as much as fact. This speculation has now been pushed back (and may be pushed even further back) into 2015, if not 2016. If this is the case it is likely sterling will likely fall further.
If you are expecting a larger currency purchase in the first half of 2015 there might be some good arguments for utilising a forward contract to fix current exchange rates. We were in an almost identical position 2 years ago on GBPEUR approaching Christmas and by March had dropped some ten cents.
Part of our service is keep you updated and examine strategies that will protect you from unexpected swings on the currency market so please email on email@example.com to discuss the options available to you.
Inflation is the rate at which prices rise or fall. Rapidly rising or falling prices can destabilise an economy and managing Inflation has been a key aspect of the European Central Bank’s (ECB) economic policy in 2014.
Mario Draghi, President of the ECB has stated that the new year may see the ECB ramp up their Quantitative Easing (QE) programme. The ECB’s approach to their economic situation has changed in 2014 from reactive to proactive with a range of measures to try and encourage growth being put in place.
QE (sometimes referred to as printing money) is where a central bank injects money into an economy to rejuvenate it and some observers have predicted the future will be a ‘stagflationary’ period in the Eurozone. This is where an economy fails to grow and inflation is a problem. It might be that just like Japan and the US before the ECB needs to continuously be ramping up the QE presses, this could lead to Euro volatility depending how the market digests such news.
Predicting 2015’s movements on Euro rates could prove very difficult but with a large amount of policy having been decided on in 2014, it may be the Euro is more susceptible to movements from other currencies.
As we expected the dollar has recovered but just like with sterling the rise is mainly linked to expectations the Federal Reserve will raise interest rates in 2015.
The US economy is finally performing well but is this mainly down to the trillions of dollars we have seen pumped into markets from their QE programme? The end of the Fed’s QE programme may yet unsettle markets, slowdowns in China, the Eurozone and the UK could see the US once again roll out the QE presses.
I would personally not be holding on for them to raise interest rates anytime soon and USDGDP traders might wish to take stock of the 15 cents improvements.
For more information on the forecast and to be kept up to date with the latest news please contact me on firstname.lastname@example.org