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Posted February 14th, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1857
US$/GBP – 1.6058
CHF/GBP – 1.5625
CAN$/GBP – 1.5824
AUS$/GBP – 1.5956
ZAR/GBP – 11.6423
JPY/GBP
– 133.55
HKD/GBP – 12.5165
NZD/GBP – 2.1159
SEK/GBP – 10.4115
US$/EURO – 1.3539

Sterling fell against a stronger US dollar on Friday after investors sold sterling on a lack of clarity about interest rates from the Bank of England. Sterling had been on a strong run on speculation that stubbornly high interest rates would see an interest rate hike in the early summer. However, with the Bank keeping interest rates on hold on Thursday (despite talk from key policy makers about raising interest rates to deal with inflation) investors were left confused and sold sterling on the lack of clarity. This week should see a little more clarity with the latest inflation figures and the Bank of England’s inflation report. Call in now to speak to one of the team for a live exchange rate.
 
In the euro zone, the euro slipped against the US dollar despite briefly posting gains on the news that Egyptian President Mubarak had resigned. This helped boost sentiment towards the riskier euro as stability returns to the country. However, the euro struggled to break over $1.35/€1 and as such is set to struggle this week. In terms of data, the key event is GDP data that is released on Tuesday. We could see some volatility, so call in to ensure you are protected.
 
In the USA, the US dollar strengthened against both the euro and sterling as a lack of clarity on UK interest rates and the euro zone debt crisis helped drive the US dollar higher. A recent run of strong US data also helped the dollar. In terms of data, there is a wide array of data including retail sales and producer price inflation.

Elsewhere, Vietnam devalued its currency for the 3rd time in a year in an attempt to address the economic turmoil that is gripping the country. The Dong has been devalued 6 times in 3 years. It could see some issues developing in South East Asia, so certainly something to keep an eye on.

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Posted February 11th, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1853
US$/GBP – 1.6064
CHF/GBP – 1.5608
CAN$/GBP – 1.6017
AUS$/GBP – 1.6092
ZAR/GBP – 11.7025
JPY/GBP
– 134.103
HKD/GBP – 12.5205
NZD/GBP – 2.1203
SEK/GBP – 10.4537
US$/EURO – 1.3548

The Bank of England kept interest rates on hold yesterday at 0.5% and kept the Quantitative Easing programme on hold at £200bn. This initially saw sterling drop against the US dollar, but later recover on the expectation that the Bank would look to hike interest rates as early as May to deal with stubbornly high inflation. Higher interest rates mean that global investors will achieve a higher return on sterling based investments and as such, sees strength from the currency. The markets will keep a close eye on next week’s inflation report for any clue as to timings of a future rate hike. Call in now for a live exchange rate.
 
In the euro zone, yesterday saw some positive data in the form of French industrial production which beat expectations. However, the lack of concrete policy with regard to a long term debt reduction plan saw the euro slip against the US dollar by close to 1% on the day. Also, peripheral debt yields crept up as investors felt less averse to buying into the assets of ‘risky’ economies. It is a relatively quiet day for data, but ensure you are protected ahead of next week by speaking to one of the team.
 
In the USA, the US dollar had a strong day yesterday, benefiting from concerns over the euro zone debt crisis but also strengthening off the back of strong US data. Figures released yesterday showed that new claims for unemployment benefits dropped to a 2 ½ year low which helped underscore a belief that the US economy was on the mend. Call in now for a live exchange rate as there is still the chance of significant volatility.
 
Elsewhere, the Australian dollar slipped against most currencies yesterday as the Reserve Bank of Australia said that they would keep interest rates on hold for some time. The impact of the recent floods, and China’s efforts to cool runaway inflation and growth have left the outlook for Australia (and its exports) slightly cloudy. It may be a good time to look at buying Australian dollars to take advantage of sterling strength.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at:
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Posted February 10th, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1761
US$/GBP – 1.6073
CHF/GBP – 1.5462
CAN$/GBP – 1.6017
AUS$/GBP – 1.5978
ZAR/GBP – 11.6875
JPY/GBP
– 132.805
HKD/GBP – 12.5180
NZD/GBP – 2.0924
SEK/GBP – 10.3661
US$/EURO – 1.3662

Today is the day the Bank of England meets. The expectation is for more of the same; no interest rate increase and no increase in the quantitative easing programme. Uncertainty arises from the high inflation figures we are seeing and from the contraction in the economy in the fourth quarter of last year. These two sets of economic data having conflicting responses. Inflation can be combated by increasing interest rates whereas recession requires expansionary economic policies such as quantitative easing. So if the BoE does make a surprise decision we will be in for a volatile time for sterling. May well be worth giving us a call to avoid this if you want to minimise risk.
 
The European Central Bank needs to elect a new president soon. It was assumed that Axel Weber the head of the German Bundesbank would put himself forward. He has now ruled himself. The speculation as to why he did this is because he is against the ECB buying peripheral euro zone debt but political pressure is making this a more than likely outcome in the coming months. This view seemed to support the euro as the sorting out euro zone debt must be one of the ECB’s key goals over the coming months.
 
No real news out of the US to influence US$ movements. A greater influence seems to be news elsewhere such as in the Middle East and in China. Against sterling it is holding above the US$1.60/£1 level which would be positive in the medium term for sterling to strengthen further against the US$.
 
For the commodity backed currencies pressure has been building following the recent increase by China to its interest rates to combat inflation. Clearly inflation is a very significant problem in China and as well as increasing interest rates we could see them increase requirements such as banks reserves. In the short to medium term we will see continued demand for the commodities produced by Australia, by Canada and by others. But longer term I suspect the real key will be whether or not the Chinese manage a soft landing as opposed to a disastrous hard landing.
 
For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at:
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Posted February 9th, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1783
US$/GBP – 1.6070
CHF/GBP – 1.5489
CAN$/GBP – 1.5981
AUS$/GBP – 1.5878
ZAR/GBP – 11.5970
JPY/GBP
– 132.50
HKD/GBP – 12.5170
NZD/GBP – 2.0834
SEK/GBP – 10.3488
US$/EURO – 1.3636

Like yesterday, limited UK economic data led to a steady day for sterling against most other currencies. The UK government has increased the levy to be raised on the banks to £2.5 billion. This hasn’t gone down well with the banks. The market is waiting for the Bank of England meeting tomorrow and any shock announcements on interest rates. So volatility could increase in the run up to mid-day tomorrow. If concerned please give us a ring so that we can talk through the various scenarios.
 
In the Euro zone German industrial production for December came in below expectations. So it isn’t just the UK that caught a cold from December’s bad weather. But just like here the German economy continues to grow and the underlying strength of Germany’s industrial sector should never be underestimated.
 
Yields on US treasury bonds continue to rise. This is lending some support to the US$ in the short term although the response to the US$32 billion issuance of three year debt was disappointing. I suspect the market sees further increases in US debt yields.
 
China increased interest rates for the second time in six weeks. Inflation would seem to be key and something the Chinese authorities are keen to get on top of.  One of the problems is that by keeping their currency artificially low they are beginning to see the cost of their imports grow significantly. Initially the Australian, Canadian and New Zealand dollars lose ground but this was soon reversed.
 
For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com
Posted February 8th, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1830
US$/GBP – 1.6137
CHF/GBP – 1.5386
CAN$/GBP – 1.5955
AUS$/GBP – 1.5842
ZAR/GBP – 11.6597
JPY/GBP – 132.30
HKD/GBP – 12.5551
NZD/GBP – 2.0793
SEK/GBP – 10.3755
US$/EURO – 1.3634

A quiet day for sterling yesterday with sterling holding onto gains against the euro and the US$. As mentioned yesterday there is a lack of substantive economic data this week and the market is waiting for the Bank of England meeting on Thursday. Talk of a rise in UK interest rates continues to be the fore but I think any increase at the BoE meeting is very unlikely.

The euro, a bit like sterling, had a quiet day. The economic data that could influence matters has been somewhat sparse and the European Central Bank held its interest rate setting meeting last week and was very firmly in the camp for holding euro zone interest rates at their current level for the time being. Against the US$ the euro has lost a bit of ground over the last week but still sits towards the top end of the three month range.
 
And needless to say the US$ has been fairly steady over the last 24 hours. What is beginning to benefit the US$ is rising yields on US treasury bonds which are increasing as the US economic performance improves. The yield on two year government bonds hit their highest level since June of last year.
 
And the same again for the Australian dollar which held steady. A benign start to the week. Given our experience over the last three years it is hard to imagine it staying this way for long and as such I would give us a call to avoid the more than likely surprises.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

 

 
Posted February 7th, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1880
US$/GBP – 1.6148
CHF/GBP – 1.5453
CAN$/GBP – 1.5950
AUS$/GBP – 1.5942
ZAR/GBP – 11.7081
JPY/GBP – 133.06
HKD/GBP – 12.5709
NZD/GBP – 2.1012
SEK/GBP – 10.4546
US$/EURO – 1.3588

On the back of better than expected UK economic data last week the markets began to talk about the UK increasing interest rates sooner than later. Mervyn King, Governor of the Bank of England, has made it clear that he wants to avoid raising interest rates as he thinks that it will affect the UK economic recovery negatively. However, inflation is on the up and hitting levels that make it uncomfortable for the Bank of England monetary policy committee who may be forced to increase interest rates. This is unlikely to happen at this weeks meeting but given two members of the committee voted for an increase last time it cannot be assume to be a certainty. Normally an increase in interest rates would be supportive for sterling but uncertainty reigns so I would also advise caution.

In the Euro zone we have important economic data released. German industrial orders for December are expected to show a slight dip when compared to November but the annual growth rate is expected to be a highly impressive 20%. Elsewhere the growth is less impressive [France is expected to have grown by 6.1%] but overall it is expected to be positive for the euro zone. The euro zone debt crisis will continue to be at the fore front of the markets thoughts this week.
 
US non farm payroll data released on Friday were slightly disappointing. This didn’t seem to affect the US$ unduly which had gained ground against the euro during the week. Economic data out of the US this week is limited and therefore events elsewhere such as in the Middle East are likely to influence the US$’s movement.

Elsewhere we have Japanese consumer confidence data released on Wednesday. An increase, the first in seven months, is expected

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

Posted February 4th, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1842
US$/GBP – 1.6154
CHF/GBP – 1.5288
CAN$/GBP – 1.5991
AUS$/GBP – 1.5846
ZAR/GBP – 11.7575
JPY/GBP
– 131.777
HKD/GBP – 12.577
NZD/GBP – 2.0868
SEK/GBP – 10.4330
US$/EURO – 1.3638

Sterling continued its run against the US dollar yesterday, hitting a high of $1.6276/£1 after services PMI data came in stronger than expected indicating strong services sector activity. With this week’s better than expected manufacturing, construction and now services figures; the case for an interest rate hike has returned. Comments from Bank of England policy makers this week have also given rise to an expectation of further hikes – especially if commodity prices remain high. Sterling is likely to remain well supported against the US dollar – especially ahead of next week’s Bank of England meeting. The outlook against the euro is a bit more mixed, with flow related to the debt crisis and risk appetite keeping sterling on its toes. Out today, we have already seen better than expected house prices so call in now for a live exchange rate.

In the euro zone, yesterday saw the European Central Bank’s interest rate decision. The bank kept interest rates on hold and disappointed many investors who were expecting a more upbeat press conference from Bank President Jean-Claude Trichet. There had been warnings in the last few weeks over inflation in the region and as a result, many had been expecting talk of interest rate hikes. The euro fell by 2 cents against the US dollar on the day as traders sold the euro in disappointment. Out today, there is some Italian inflation data so call in now for a live exchange rate.
 
In the USA, the US dollar is set for a big day with Non-Farm payroll figures released this afternoon. Economists are expecting 140,000 new jobs to be added to the economy in January and the figure can cause a lot of volatility so ensure you speak to one of the traders to avoid losing out if there is significant movement.
 
Elsewhere, the Reserve Bank of Australia raised its 2011 growth outlook and inflation forecasts which saw the Australian dollar strengthen. Importantly this is despite the flooding in Queensland and a potential slowdown in China, so the markets reacted positively.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com
 
 
Posted February 3rd, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1744
US$/GBP – 1.6224
CHF/GBP – 1.5296
CAN$/GBP – 1.6012
AUS$/GBP – 1.6003
ZAR/GBP – 11.5997
JPY/GBP
– 132.34
HKD/GBP – 12.6357
NZD/GBP – 2.0988
SEK/GBP – 10.4210
US$/EURO – 1.3811

In the euro zone, the euro slipped against both sterling and the US dollar on uncertainty surrounding a euro zone rescue plan and profit taking by investors following the euro’s recent gains. There was talk that the euro zone was considering allowing its rescue fund purchase debt from distressed countries, but a German official stated that Berlin was not happy allowing this to happen. This uncertainty, combined with the situation in Egypt and the Middle East saw traders closing out profitable positions after the euro hit a 2 ½ month high against the US dollar. Out today there is the ECB’s interest rate decision and press conference – ensure you are protected from any ensuing volatility by speaking to a trader sooner rather than later.

Sterling hit a 3 month high against the US dollar yesterday, touching $1.6232/£1 as strong data and positive comments from policymakers gave rise to expectations of interest rate hikes sooner than expected. Construction figures showed that activity returned to growth last month, with the numbers easily beating expectations. Andrew Sentance (who has been advocating interest rate hikes for some time) warned against delaying a rate rise and deputy Governor of the Bank of England, Charles Bean warned that a rate rise would be inevitable if commodity prices continued to rise. Markets are now pricing in a potential rate rise in May – with some expecting a hike next week. A key level is the November high of $1.63/£1 – if sterling breaks through this, it opens up the road to further gains. Out today there is important service sector figures – call in now for a live exchange rate.

In the USA, yesterday’s ADP non-farm payroll figures came in better than expected, showing an increase of 187,000 jobs against an expectation of 147,000. The US dollar also gained against the euro following the uncertainty over the European rescue plan, but also as the currency regained its ‘safe haven’ status in the face of growing uncertainty in Egypt. There is some important PMI data released in the USA, so call in now for a live exchange rate.

Elsewhere, the Swiss franc has also seen some risk related buying. Investors traditionally look to safe currencies in the event of market risk, such as what we are seeing in Egypt. In addition, overnight into tomorrow we have the Reserve Bank of Australia’s interest rate policy statement which could be quite interesting. Call in now for a live exchange rate.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

 
 
Posted February 3rd, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1687
US$/GBP – 1.6180
CHF/GBP – 1.5128
CAN$/GBP – 1.5991
AUS$/GBP – 1.5990
ZAR/GBP – 11.4896
JPY/GBP
– 130.72
HKD/GBP – 12.6004
NZD/GBP – 2.07165
SEK/GBP – 10.3067
US$/EURO – 1.3840

Sterling shrugged off last week’s poor GDP and concerns over the situation in Egypt to hit an 11 week high against the US dollar of $1.6143/£1. Manufacturing purchasing figures surged to the highest level since the survey began in 1992 and led to markets pricing in a 70% chance of an interest rate hike as early as May. There is increasing belief in the idea that the cost of long term inflation would outweigh the benefit of leaving rates on hold. We are starting to see support for a 0.25% rate hike to curb inflation and at the same time maintain growth. However, mortgage approval figures were poor and sterling is still likely to remain very sensitive to negative data, so there is still a large risk that it could drop back down – take advantage while you can.
 
In the euro zone, the euro continued to strengthen against the US dollar spurred on by strong manufacturing data around the world and the subsequent boost that this gave to appetite for riskier investments. In addition, banks in the euro zone borrowed over €200bn from the European Central Bank fund this week – a move that will keep high liquidity in the region’s banks and has kept investors happy. Released today there is producer price inflation for the region, which could be fairly interesting so call in now for a live exchange rate.
 
In the USA, it is a relatively quiet day for data against a busy week. Today sees the ADP non-farm employment change – generally seen as the less important of the 2 figures released this week, the other being on Friday. However, last month’s figure showed a 200,000 surge in employment that set up the markets for the Friday figure which ultimately was very disappointing. Call in now for a live exchange rate as we are seeing US dollar weakness driven by interest rate expectations.

Elsewhere, the Japanese yen fell in Asian trade overnight as risk appetite around the world saw investors selling the traditionally ‘safe haven’ currency. Call in now for a live exchange rate.

For more information on Smart Currency Exchange, please call our freephone: 0808 163 0102 (+44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyExchange.com

 
 
Posted February 1st, 2011 by Charles Purdy

Daily Currency Note

EURO/GBP - 1.1676
US$/GBP
– 1.6052
CHF/GBP – 1.5078
CAN$/GBP – 1.6004
AUS$/GBP – 1.5984
ZAR/GBP – 11.5015
JPY/GBP – 131.37
HKD/GBP – 12.5088
NZD/GBP – 2.0670
SEK/GBP – 10.2646
US$/EURO – 1.3754

Sterling rose against the US dollar on Monday, boosted by a strong day for the euro as data showed increasing inflation in the region and increased expectations of an interest rate hike in the euro zone. Sterling also saw a boost from a newspaper article in which Martin Weale (the latest Bank of England policy maker to call for a 0.25% interest rate hike) stated that a small interest rate hike soon would cost less than sustained inflation in the long run. The prospect of tightening monetary policy in the euro zone and UK contrasts sharply with the USA, where the Federal Reserve is likely to keep monetary policy loose for some time to come. Out today, there is important house price and manufacturing data so call in now for a live exchange rate.

In the euro zone, inflation came in at 2.4% for the year – up from 2.2% the last month. This follows on from ECB president Jean-Claude Trichet’s comments a few weeks ago warning over higher inflation. Higher interest rates in the region will make euro based investments a more attractive option and as such, saw the euro strengthen against the US dollar. It seemed that both the euro and sterling shrugged off any concerns over the situation in Egypt, which has the potential to cause shocks through the currency markets so ensure you don’t lose out if it does by speaking to a trader today.

In the USA, the US dollar slipped to near a 2 month low against the euro as the USA’s monetary policy outlook contrasted sharply with the euro zone’s inflation and potential interest rate hikes. Markets are now keeping an eye on the key level of $1.3760/ €1 – if the euro goes through this, it could open the door to $1.39/€1 or beyond. Oil broke through $100 per barrel yesterday for the first time since the depths of the credit crisis on concerns over supply and Egypt, but bizarrely we did not see much risk related buying of the US dollar. Out today, there is manufacturing PMI data so call in now for a live exchange rate.

Elsewhere, Canadian GDP came in better than expected posting 0.4% gains against an expectation of 0.2% helped by higher demand from China for commodities in recent months. Normally at this time of year, writers of currency updates can look to the football transfer markets for examples of why planning your currency exchange effectively (and not leaving it until the last minute) can protect you from fluctuations in exchange rates. However, yesterday’s big signings seemed to be a strictly domestic affair… Feel free to call in for a live exchange rate or bemoan FernandoTorres’ move to Chelsea!

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