Dear Charles,
Weekly currency note: 7th October 2005
Overview
The Euro has continued to strengthen against sterling
while the US$ has seen minimal movement especially
when compared to the major moves in the US$ over the
last month. The Bank of England minutes painted a poor
outlook for the UK whereas Euro land and the US fear
inflation.
Why is currency management so important?
If you had bought 200,000 euros three weeks ago at 1.48ish
it would have cost you £135,135. If you bought it today it
would cost you nearly £3,500 more.
What else could you have done with that £3,500?
As always I think the key is to work to a realistic budget
price and when this budget rate presents itself secure it
either through an immediate purchase of the currency or
through a forward contract [please call to discuss this
option if you are unclear as to what this means].
This removes all the risk, the stress and the strain.
You know exactly what amount you need in sterling. The
figure will not change. No more sleepless nights.
Open an account today by calling me on 0870 285 0364 or
fill out our online quotation form
at: http://www.smartcurrencyexchange.com/smartquotation.htm
The Euro vs. the £
The Euro started the week at 1.467ish and is currently
1.453ish. The Euro has strengthened 2.5 cents in the
last two weeks.
Poor UK economic data has further highlighted the
uncertain state of the UK economy. This has raised
[and substantiated to some extent by the Bank of
England minutes from their last meeting] in the mind
of the market the possibility of reduced interest rates
here in the UK.
Inflation is increasing in Euro land which raises the
very real spectre of higher interest rates from the
current 2% bank rate.
Inflation is still a major problem here in the UK and
I believe there is an equal chance of the BOE raising
interest rates in the medium term as we do of them
reducing interest rates.
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. We are currently in the bottom half of
this trading range with the Euro having the upper hand.
If time allows you, you should try and secure an exchange
rate if buying Euros in the top half and if selling Euros
in the bottom half.
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 1.766. It is now 1.761. Movement has
been minimal when compared to the rest of the period
post Hurricane Katrina.
The US economy does not seem to have been unduly affected
by Hurricane Katrina and inflation seems to be the major
concern. Further interest rate increases are expected
further supporting the US$.
US$1.73ish is a key level and we wait to see if it can
breach this level and strengthen further, stabilise at
this sort of level or begin to weaken as other fundamentals
[i.e. the twin deficits take control].
The Dirham and the US$ 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 2.31 to
2.32 but overall the Aus $ is in a strengthening trend.
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$ moved from 2.05 at the start of the week to 2.065
at the end. 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].
Over the last few months the Can$ has strengthened by 10%
plus. At the end of April it was 2.35ish. 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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