Weekly Currency Note: 28th October 2005

Dear Charles,

Weekly currency note: 28th October 2005

Overview

No major moves in the market. Sterling lost slightly
against the Euro and gained a bit against the US$.
Waiting for some real direction. What will be the
catalyst is hard to tell but I feel as if the next
moves could be significant. Which way is impossible
to say.

Why is currency management so important?

We recently got a testimonial from a client who
stated that she had saved £5,000 from using our
services when compared to the bank. This surprised
even me. Just shows you what can be achieved if you
spend a bit of time thinking about your currency
requirements.

We have developed a short document which has helped
a number of clients to determine their requirements
more clearly. If you would like to find out more
please give me a ring on 020 7903 5275.

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The Euro vs. the £

The Euro started the week at 1.477ish and is currently
1.470ish. Sterling had gained 2 cents in the previous
two weeks and has now given half of it back.

Talk is of increased interest rates in Euro land with
the great fear being inflation. Also some of the
economic figures coming out off Euro land have been
more encouraging.

There has been no clear trend in the Euro/sterling
exchange rate for the last few months - just a broad
trading range of 1.44 to 1.50. This range seems to have
become even more constrained in the last few weeks with
the range being limited to 1.46 to 1.485.

We need some sort of catalyst to get us out of this
malaise. What that will be is hard to guess but I
suspect when it happens the move will be both quick
and significant.

Just so you know, currencies such as the Cypriot £
and the Hungarian Forint, which are planning to move
to the Euro in due course, are closely aligned to the
Euro. Therefore they tend to “track” the Euro. Sometimes
they do have a life of their own but they do tend to
come back into line sooner rather than later.

If you need to BUY or SELL EUROS now is a good time to
discuss your options, so call me on 0870 285 0364 or
fill out our online quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

The US$ vs. the £

Last week it was 1.761.It is now 1.774. The period of
consolidation continues. A slight weakening in the US$
but as with the Euro no real direction.

Further interest rate increases are expected further
supporting the US$.

US$1.73ish is a key level and we wait to see if it can
breach this level and strengthen further, stabilise at
this sort of level or begin to weaken as other fundamentals
[i.e. the twin deficits] take control.

My inclination is still for further strengthening in the
US$ but I could be very wrong.

The Dirham and the US$ are closely tied. Therefore as the
US$ moves so does the Dirham.

If you need to BUY or SELL USD, call me on 0870 285 0364
to discuss your options or fill out our online quotation
form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

The Aus $ vs. the £

The Aus$ has weakened slightly over the week from 2.36 to
2.365ish but overall the Aus $ is in a strengthening trend.
The Aus $ will, however, I suspect take its lead from
the US$.

The Aus$ hit a high of 2.27ish late July. Having hit 2.40
a few weeks ago it is retesting the July level. We wait to
see if it is able to strengthen even further and beat the
July high.

If you need to BUY or SELL Australian Dollars, call me on
0870 285 0364 to discuss your options or or fill out our
online quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

The Can$ vs. the £

The Can$ was 2.09 at the start of the week to 2.09 at the end.
Very little action.

The Can$ is very strong at the moment. Justifiably so as the
economy seems to be booming and its commodities are in much
demand [and I talk to a lot of people who are emigrating to
Canada]. Interest rates may be increased to combat inflation
lending further support to the Can$.

The current level “is very significant” and for the Can$ to
strengthen further will take some effort. However, if it does
so then we could see a very rapid appreciation.

History would still favour a return in the Can$ to 2.20 plus
but timescales are difficult if not impossible to estimate!

If you need to BUY or SELL Canadian Dollars, call me on
0870 285 0364 to discuss your options or fill out our online
quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm

If you would like to discuss a currency not mentioned in this
note, the latest movements, secure an exchange rate or discuss
your particular situation, please feel free to contact me on
0870 285 0364

Lastly, we’re always working to improve the service provided by
Smart Currency Exchange, so if I can produce information in a
better format or make it easier to understand, of if you want
me to clarify what a particular term means, please send me
your questions, suggestions
and/or comments to Charles@SmartCurrencyExchange.com

Think Smart,

Charles Purdy
Director

Phone: 0870 285 0364
Fax: 0870 285 0365
http://www.SmartCurrencyExchange.com

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Disclaimer

As ever these are my musing as to how I see the various markets
going. They should not be taken as fact. The market does what
it wants to do. I have no crystal ball and as ever I recommend
that if an exchange rate works for your budget then don’t try
and wait for an even better exchange rate, as Murphy’s Law says
the rate will go against you and cause you maximum pain!

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