US Dollar

Dollar Rally Continues

Last week saw the US Dollar continuing its recent run of strength, with the Greenback hitting its most expensive level for a month. The momentum caused by the Federal Reserve’s likely slowing of its monetary easing programme, has returned the USD to safe haven status, and seen investors buying the currency with a resultant increase in value and drop in rates for those of you looking to send money to the USA. The minutes of the latest Federal Reserve meeting are released on Wednesday evening and could see this pattern gain further impetus.

Closer to home we had a quieter week in the UK and Europe, with the Euro trading in a range of less than a cent against the Pound all week. In Europe this week the only data of note is consumer confidence on Thursday.

In the UK and for the Pound however we have a busy week ahead with key data releases throughout the week. Tomorrow sees the monthly consumer inflation figures releases, which can have a significant impact on the Pound, and on Wednesday the Bank of England minutes will reveal how much the prospect of further QE was discussed by the MPC earlier this month. On Thursday we then have the first revision to Q1 GDP, and we would urge caution on this particularly as the initial reading was better than expected, and most recent revisions have been negative. Needless to say any significant downward revision could raise the prospect of a third period of recession in the UK which would very likely damage the Pound.

Further afield this week there are figures due out in Japan, New Zealand and Canada.


Weekly News

The bank holiday has brought some sunshine to the UK at last, and the Pound has also been basking in good rates for those of you sending money abroad. The Euro in particular has been held at cheaper levels by the European Central Bank’s decision last week to cut interest rates in the single currency area, which as regular readers will know usually weakens a currency’s value. The Euro has not been cheaper since January.

In the USA, the Dollar was not affected too much by Friday’s better-than-expected employment figures, and rates for sending USD, as well as pegged currencies such as AED, remain around their best since February.

There have also been improvements in rates for sending South African Rand, Australian Dollars, and Canadian Dollars in the last week.

Focus this week moves to the Bank of England. The monthly policy announcement on Thursday is unlikely to bring much change to British monetary policy, but any further rumours of Quantitative Easing will be likely to bring grey clouds back to the UK economic outlook. The surprisingly good recent GDP figures are also subject to revision in the coming weeks, so the Pound is unlikely to be surging ahead just yet.

With all this in mind we think most exchange rates are good value at the moment for those of you sending money abroad. There is little other data out this week so we might expect a quiet week on the markets – as always though there is crystal ball and caution may be wise in the current climate.

If you would like to take advantage of any movements in your favour, simply call Simon Eastman (01923 725725)


The Week Ahead

For the US Dollar and UAE Dirham, late last week saw a rally in exchange rates, with an improvement of 2c in rates for the Pound on Thursday. Investors moving away from the US Dollar and back into ‘riskier’ currencies caused the Greenback to weaken.

This week as we head into the end of July, we have some important data due out which is likely to move exchnage rates. In the US on Friday we have the main labour market statistics, and trade balance figures for South Africa and Australia on Tuesday and Thursday respectively are likely to affect the cost of the Rand and Dollar. The Canadian Dollar, which has been fairly stable recently, sees GDP figures released tomorrow.


Sterling Drops Across The Board As UK Recession Deepens

This morning thew pound dropped across the board following the UK GDP revision for Q2 which was estimated to be a slight improvement from the first reading at -0.2% compared to -0.3% last month. Instead it came out at -0.7% which is a massive difference to expectations and shows growth is much worse than first thought. This most likely isn’t being helped by the issues in the Eurozone and the weak Euro making imports/exports more costly. Also the unusually wet summer and additional Bank Holiday have affected the retail sector adding to the UK’s woes.

The pound is trading half a cent down against the US and Canadian dollar, 1 cent down against the Kiwi and Aussie dollars.


Pound Holding Its Ground

Despite a mixed bag of data last week, the Pound managed to improve its value yet further against the Euro, and even managed to post some gains against the US Dollar. Inflation and retail sales figures were both sterling-negative, as were the Bank of England minutes, but the markets seem to be more focussed on macroeconomic problems these days. A slight fall in unemployment was the only vaguely good news for UK plc.

There were also gains for the Pound against the South African Rand.

As rumours of a Spanish default gain pace, many buyers are now taking advantage of excellent Euro rates. The US Dollar (and pegged currencies, eg AED) have seen strength in recent weeks but any signs of weak US data this week will likely increase expectations of more monetary easing in the US, which would probably lead to a weaker dollar and better rates for sending USD payments.

There is not a huge amount of data out this week, although the revision to UK GDP, on Wednesday, could affect the pound. Any downward revision would mean the recession is deeper than previously thought and could bring exchange rates down. Conversely, sterling would gain some strength if there are any signs of recovery – although the IMF have just downgraded their forecast for UK growth this year to just 0.2%, so we won’t be holding our breath for positive news.

Elsehwere, the New Zealand and Australian Dollar rates both fell last week, as both currencies gained in price. We have the New Zealand interest rate decision and Australian inflation on Wednesday, so if you are looking to send a transfer in either currency, check for any helpful movements on Wednesday morning.


Commodity Currencies Continue To Gain

The Pound continued to fall on Thursday and Friday against most other currencies, including the US, New Zealand, Australian and Canadian Dollars and UAE Dirham.

The ‘commodity currencies’ have all gained significant strength recently, giving worse rates for sending money to South Africa, New Zealand and Australia in particular. On the other hand, if you have assets in any of these countries to bring back to sterling, now could be a good time to consider fixing an exchange rate.

This week, we don’t have any major data due out in the UK, and now that Wimbledon and the British Grand Prix are also over, perhaps headlines will all be focussed overseas. Foreign exchange rates are still as unsettled as the British summer, so do let us know at Currency Index is you have a transfer that you would like us to help with in the coming weeks.


China’s Surprise Rate Cut

Yesterday was a day lead by Central Banks around the world, with great anticipation the markets awaited news from the Bank of England at midday to see if they would indeed, as greatly speculated recently, increase the asset purchase program known as Quantitative Easing. Noon came and indeed they did, pumping another £50 Billion into the UK economy. Normally this would lead to sterling weakness but with much speculation already the markets had seemingly overpriced in this event and the pound took advantage gaining across the board.

More surprisingly was that at the same time in the Far East, China decreased their overnight lending rate by 25 basis points giving instant strength to those currencies affected by trade in that part of the world. The Aussie dollar went on the offensive, gaining all day against the pound by over a cent. Those looking to move money across to the other side of the world quickly saw their returns diminish. The US dollar also took favour from this making good gains against the pound.

With the markets having little time to digest these moves the European Central Bank made the surprise move to cut their interest rates by 25 basis points to their lowest levels ever, to 0.75 percent. The reaction was instant Euro weakness, a welcome sight for those sending money overseas to the Eurozone. The Euro lost a cent to the pound and similar against the US dollar, giving some great buying levels close to the best levels in 3 ½ years we saw a couple of months ago.

This morning levels open where they closed yesterday and we have a raft of data to bring the week to a close. UK PPI data comes out at 9.30am followed by German Industrial Production. Across the pond Canadian unemployment data and building permits are released around lunchtime along with Ivey Purchasing Managers Index later on.

The main event today though is the US Non Farm Payrolls, always a key release and potential big mover of the currency rates. With the familiar effect of the dollar on GBP/EUR rates we could be in for some volatile trading this afternoon and potential buying opportunities so be sure to keep in touch with your broker at Currency Index if you have a requirement coming up soon.


Commodity Currencies Get A Boost

The Pound ended June at reasonable levels against the Euro and US Dollar, despite the European summit providing a surprise deal for Eurozone bonds which had strengthened the Euro overnight on Thursday. Rates recovered somewhat on Friday, even though Bank of England governor Mervyn King gave a speech on Friday, which often softens sterling.

With a newly found confidence in the prospects for the global economy, commodity currencies have also performed well against the pound over the last week with the Australian and New Zealand Dollars, and South African Rand, strengthening 2.09%, 1.7% and 3.48% respectively (giving lower rates for sending money to Australia etc).


Investor Sentiment Pushes Cable Lower

Trade between the pound and the dollar has been going only one way this week…. down. As the problems in Spain continue to worry investors their appetite for risk is decreasing and as always in these situations the safe haven US dollar is the main beneficiary.

With the issues in Europe looking set to continue, I cant see the downward trend of cable halting. If they break through current resistance points trading in the early 1.50′s could be a possibility in the next couple of weeks.

The GBP/USD rates have come down some 5 percent in the past month, making a difference of around £8000 if you were looking to purchase a house for $250,000. That is a substantial amount in anyone’s books and could be the difference between affording the property or not.

This is a prime example of why tools like “forward contracts” and “stop loss orders” are useful, which you can use minimize exposure to movement. The forward contract lets you fix an exchange rate for settlement up to a year ahead, whilst only parting with a small amount of your capital. A stop loss order is put into the market at a rate below where the market is, your minimum acceptable trading level. If the rates are dropping this stops you losing out on purchasing as the order is automatically triggered if it hits the pre-determined level. Handy if you have a budget and the market is dropping, which without the stop in, could cost you the property.

If you have a US dollar requirement, be it for property or for business requirements it may be prudent to get in touch to discuss the options available to protect yourself. Contact me directly here or speak to one of the brokers at Currency Index today.

 

 


The UK Recession Deepens…..

Yesterday was all about the UK GDP figure, the second reading for Q2 2012. The first revisions had shown we were technically in recession and despite this the pound had held its own against the Euro with the zone in crisis. Of late the pound had slipped against the USD as investors retreat from riskier currencies and stockpiled the safe haven dollar.

The final reading came out at 9.30am, and despite expectation for no change, the final revision came in lower at -0.3% for the quarter and for the first time since 2009, the year on year figure posted a negative too at -0.1%. What was to come was a rocky day as the pound steadily lost ground across the board, all except against the Euro where losses were capped for most of the day. As often we have seen this past week, with the Eurozone is in such turmoil even the poor GDP figure couldn’t stop the pound gaining back as trade concluded. So still we have trading levels against the Euro near to the 3.5 year high buyers have enjoyed lately. With many worried about the rising problems in the EU countries, at Currency Index we have seen an increase in those expats selling property and repatriating the funds to the UK. If this is the case for you, then it’s worth noting the recent trends and strong sterling against the single currency. A forward selling contract might be the way forward for locking that exchange rate in one of the dips in trade in order to maximise returns.

The greenback, as mentioned continued to rally against the pound yesterday gaining another cent to add to the 6 cents already gained over the past 10 days. Investor sentiment is low the crisis in Europe develops daily and with the UK previously being favoured as the safe bet, the thought of recession, reduced growth forecast and the chance of further QE has changed that thinking. The pound is now wide open to negative sentiment and data releases which recently its seemed immune too. As the week comes to a close today and we enter the final few days of the month will the pound hold up or will investor sentiment continue to push sterling lower?

Today is very light on data with only a German consumer confidence survey to digest and across the pond the Reuters consumer confidence index later in the day. As news that Bankia shares in Spain have been suspended this morning ahead of an expected bailout call from the bank to the Government it could be another jumpy day for the Euro, but as we know these markets are very unpredictable so only time will tell!


Sterling Update

Sterling enjoyed another good week after the Easter break, particularly against the Euro where we saw the best exchange rates since August 2010. However we have a busy week ahead, and any signs of economic weakness in the UK will be likely to send the Pound lower, since sterling may prove not to be the safe haven currency that investors are hoping for.

The key events to look out for in the UK are likely to be Tuesday’s inflation figures, Wednesday’s Bank of England minutes, and Friday’s retail sales. Remember that it is good for UK exports if the Pound weakens, so the Bank of England may be keen to halt the recent rise in sterling’s value too.

Last week also saw improvements in exchange rates for sterling against the South African Rand, but falls against the Australian Dollar and Japanese Yen. In trading today, the Pound has lost value against the Euro, but gained against the Canadian and US Dollars and UAE Dirham, despite better than expected US retail sales figures.

Spanish debt problems also continue to hit the headlines, with the cost of borrowing for the Spanish government this morning rising above 6% for the first time since December. Spain may now impose tough spending cuts on the 17 regional authorities in an effort to placate markets and avert a Greek-style crisis, which of course will have implications for Euro exchange rates in the coming weeks and months.


BRC Reports Improvement In Retail Sales

Retail sales have risen at their fastest rate so far this year, giving the Pound a further boost in trading today, particularly against the US Dollar.

The British Retail Consortium reported an annual increase in 1.3% in value terms.

The Pound has held steady against the Euro today, but is up elsewhere, particularly against the US Dollar where exchange rates have increased nearly 1 cent in 24 hours.


Sterling/US Dollar Near 5 Month High

For those of you looking to buy US dollars rates are picking up. The greenback sell off has continued after Ben Bernanke’s comments which indicated the door is being left open to further quantitative easing in the States. We have seen sterling creep up dramatically so far this week, jumping a cent and a half yesterday and continuing the rally this morning ahaead of UK CBI data at 11am.

1.6 is a key resistance point for cable (Pound-Dollar) so we will have to see if it can push above. The next tough resistance is 1.6014 and a move above this level is seen as a breaking point, with some traders noting a rise above this point could see significant gains for the pound. The fact that the previous resistance point of 1.5924 was smashed so easily has left the door wide open for a rise above 1.6 according to city analysts.

So watch this space is the message here. We have CBI data out shortly and a raft of speeches later in the day from various Federal Reserve board members. Similar comments to Bernanke’s yesterday will almost certainly hurt the dollar. Tomorrow the UK has a GDP revision reading at 930am along with business investment figures, another key indicator of economic health.

UK data has on the whole been fairly buoyant recently and although sterling/euro has remained fairly range-bound we have seen sterling make gains against the US, Aussie and New Zealand dollars recently.

If you have a dollar requirement coming up and would like me to be your eyes and ears on the markets please fill out the contact form or email me directly at sre@pounddollarexchange.co.uk


Buying US And Canadian Dollars, Will We Hit 1.6?

Across the pond in Canada we have had Consumer Prices Index figures out at lunch time followed by New Home Sales in the US and a speech by FED chairman Ben Bernanke early evening. The Canadian dollar has been trending down against the pound giving good opportunities for buying Canadian dollars. If you have a requirement coming up speak with Currency Index today and make sure you don’t miss out on the best GBP to CAD rates in the past couple of weeks.

The Canadian CPI came in better than expected at 0.4% and 2.3%  compared to forecast 0.3% and 2.2% monthly and yearly figures respectively. Although better the broadly weak Loonie couldn’t maintain the brief gains it made against sterling and currently sits nearly a cent higher than this morning just under 1.59. As predicted yesterday I feel the move will continue up to the 1.6 mark next week.

The US new homes sales data released was lower than expected and so we have seen some dollar weakness this afternoon reversing any gains the greenback had made after the UK’s poor data this morning. Only 313,000 new homes sold last month compared to 325,000 expected. The month on month percentage figures were drastically different coming in at -1.6% for February compared to a 1.3% growth, in addition to a revision for the previous month of -5.4% from -0.9%!

The dollar slide will now be compounded or halted depending on Ben Bernanke’s speech later today. Coming after the close of trading in Europe it will be Monday until we see the effects, if any. Could we hit 1.6 next? I personally think if Bernanke’s comments are subdued the rates will be dictated by investor sentiment towards China and Europe. Asian trading early Monday morning will set the tone for where we open here in the UK. I’m betting sub 1.6 still… we will see.

Good times for those buying either US or Canadian dollars at the moment, contact me directly if you have a requirement and would like me to be your eyes and ears and I’ll be happy to assist you get the best exchange rates.

 


Dollar Holds Firm

USD

Pound to US dollar rates held firm over the days trade as the FED economic outlook last night was more upbeat than previous months. As reported yesterday this was expected to give the dollar a boost against the pound but with the UK outlook looking rosier with a string of above forecast data releases recently it has made little ground.

Over the day after sterling initially spiked as European trade opened the rates have slowly trickled down to current levels around 1.57. Trading has ranged within a slim half cent margin all day.

AUD/NZD

Against the antipodean dollars, Aussie and New Zealand, the pound has gained all day. The 1.5 mark has been reached against the Aussie having been trading in the 1.4′s since January and for the Kiwi we heading up towards 1.94. The main driver against these type of riskier commodity lead currencies is investor sentiment which is lower over worries about European debt. Other commodities like gold and oil are also trading lower, with gold down 3% today alone.

There is a raft of Australian data out overnight which could affect the dollar, coupled with the fact that limit orders for GBPAUD at 1.5 will have been triggered which could mean the rise is short lived. Anyone with an Aussie or Kiwi requirement might be wise to lock in while the rates are still high.

 

 

 


US Dollar Weak Ahead Of FED Policy Meeting Tonight

Better than expected US retail sales figures earlier today initially pushed cable lower, edging towards the 1.56 resistance point, the lowest point since January. It was expected that better retail sales may lead the FED to be less dovish ( a dovish stance generally supports low interest rates)  in their statement on future policy and this may cause pound/dollar rates to drop even below this 1,56 level. This of course did happen as the retail sales figures came out at 1.1% from 1% forecast and 0.9% against a forecast 0.7% excluding auto sales but the downside did not last.

Despite this thinking, the IBD Economic Optimism index which came out later was much worse than expected and seemed to be a catalyst to push the dollar lower againt the pound and euro over the rest of the day, since the US market opened the Pound has gained over a cent and the Euro 3/4 of a cent against the dollar.

Maybe its mixed feelings within markets as to the tone of Ben Bernanke’s (the FED president) speech later? We will have to see what happens overnight. We are currently at 1.5725 and have been for the past hour. If the FED statement indicates rates could go up in the US sooner than expected we are likely to see dollar strength but with a mixed reaction this afternoon we will have to wait and see.

 

 

 


Euro And US Dollar Gain Value

Last week saw a dip in exchange rates for the Pound against both the Euro and US Dollar. In the USA, non-farm payrolls on Friday showed that more jobs had been created than expected, which gave the dollar some strength, and in Europe private creditors holding Greek debt agreed a write-down of value which means that the EU bailout can go ahead, giving the Euro strength too.

The Pound also finished the week lower against the Canadian, Australian and New Zealand dollars. Interest rates were held as expected last week in the UK, Eurozone, Australia and Canada, having little effect on exchange rates, and the Bank of England also held Quantitative Easing at its current level.

This week, the main data in the UK is unemployment, due out on Wednesday morning. After recent news has been positive for the UK and the Pound, sterling is vulnerable to any negative data and exchange rates could fall on Wednesday if the headline unemployment rate increases from 8.4%.

Elsewhere, if you are buying or selling US Dollars, keep an eye on the FOMC minutes released tomorrow (Tuesday) at 7pm, and Friday’s inflation figures, while if you are looking to make a Euro transfer, the ECB monthly report on Thursday will be important, as will Wednesday’s CPI inflation figures. The Euro may have scope for more strength (lower exchange rates) this week now that the Greek bailout looks set to happen, despite question marks over the long-term sustainability of the deal.

Many of our clients are currently using Forward Contracts to lock into rates for the coming months, and if you would like to see what kind of rates are available to fix for your own requirements, please fill out the contact form or contact me directly sre@pounddollarexchange.co.uk.


Poor US Data Strengthens Dollar

Pound to US dollar exchange rates are moving down following a raft of lower than expected economic data. The average hourly earnings data came in lower at 0.1% and 1.9% compared to 0.2% and 2% respectively. The weekly average earnings came in as expected. The trade balance was much lower than forecast coming in at -$52.57 billion  compared to -$49 billion.

The only figures which improved on forecast was the non-farm payrolls which was expected to show an additional 210,000 jobs but actually improved by 227,000 jobs. Despite the better figure, last months was revised up by some 45,000. The problem with these levels of non-farm jobs is that for the past 3 months the figure has come in under 300,000 which would be more expectant in a strong economy.

As we have seen recently, negative US data tends to be dollar positive as investors risk appetite shrinks and the safe haven dollar is favoured. Over the day we are now a cent lower on cable.

The Euro despite the Greek bond swap happening has been shaky this afternoon as traders are still unsure of the Euro zone debt crisis and wary that only 85% of bondholders agreed to the swap. Pound to euro exchange rates have made back all earlier losses and gained, trading just under the magic 1.2 level once again.


Data Heavy For Buying Dollars

If you have a buying dollar requirement, whether its Canadian or US be aware of the various data releases today which will influence your purchase. Following the UK data this morning we are already seeing pound weakness across the board and this afternoon the following releases will bring further movement.

Canada:

Unemployment Rate, Net Change In Unemployment (both out at 12pm) & the less influencial International Merchandise Trade & Labour Productivity figures (at 1.30pm).

US:

We have a raft of major employment data which historically can lead to major swings in the exchange rates,

Non-Farm Payroll, Average Hourly & Weekly Earnings, Unemployment Rate & Trade Balance all at 1.30pm. Later the GDP estimate and Wholesale Inventories come out at 3pm.

Keep up to date with the outcomes and rate changes here at pounddollarexchange or contact me directly if you have a requirement and would like to be kept posted on developments.


US Data Weakens Dollar

This afternoon pound to US dollar exchange rates weakened off following the release of a raft of US data.  Mortgage applications fell from -0.3% last month to -1.2% this month showing less people buying homes. The employment figures were more positive with ADP employment change up by 216,000 compared to forecast 208,000. Non-farm productivity came in slightly above predicted at 0.9% and finally unit labour costs outperformed at 2.8% compared to 1.2%.

The dollar had been gaining against the pound all day until these figures, which as is the case lately, a positive data release is negative for the green-back. Why? Investors see positivity in the US (the worlds largest economy) as positive for global economic outlook and it lifts sentiment. The dollar is seen as a safe heven currency so positivity gives investors the appetite to take more risks with their investment and we usually see the commodity currencies and equities benefit.

Later tonight the US consumer credit change report comes out which indicates how much money was borrowed. A large figure is seen as positive as it shows consumers have money to fund large purchases, therefore fuelling economic growth. I would expect a good figure here to further weaken the dollar but whether this will be continued through Asian trading until tomorrow is a different matter. The rates on cable still hovering in the low 1.57′s whilst against the weaker euro the dollar trades in the low 1.31′s.


Cable Slides Off Poor House Data

Pound to US dollar exchange rates (known as Cable) fell as the Halifax house price index figures came out lower than expected. We have seen a full cent gain by the dollar since trade opened, dropping below 1.58. Recent figures from the US have been good and although one would expect a stronger currency off the back of positive figures the case has been the opposite. Euro Dollar rates also pushed lower following the weak Euro zone GDP figures earlier today, with the dollar gaining 75 points so far.

The USD is seen as a safe currency so when investors are worried about global economic factors the dollar is bought up making it stronger. As America is the largest global economy, if data is coming out better than expected investor confidence grows, they are less worried and investments become riskier. The result of this is selling off the safe haven dollar and buying riskier currencies like the “commodity” led Canadian, Aussie and NZ dollar and to some extent sterling.

With no data out from the States today we may well see the slide in cable continue but over the rest of the week comes a raft of employment and jobs data so check back for updates on how the rates are affected. If the key non-farm payroll figure on Friday comes in better than expected I predict we will see higher pound to dollar exchange rates. If you have a requirement register your interest at sre@pounddollarexchange.co.uk and I can keep you posted as data releases unfold.