Weekly Currency Note: 4th November 2005

Dear Charles,

Weekly currency note: 4th November 2005

Overview

Sterling strengthened slightly against the Euro but
weakened against the US$. We have just seen the breach
today of the US$/Euro exchange rate of 1.19 which may
prove to be very significant. If some momentum builds
up then we could see the US$ strengthen significantly
against both sterling and the Euro. How the inter
relationship between sterling and the Euro plays out
is difficult to assess but the benefits to Euro land of
a weaker Euro against the US$ will be significant. We
need to watch the week ahead carefully.

Why is currency management so important?

A two cent movement in either the US$ or the Euro may
seem small but when you have a reasonable amount to
change it can easily add up. If you were changing
£100,000 and you got your timing right then you could
have gained £1,000 to £2000 in the past few weeks.

If you have time on your side make sure you develop a
currency strategy and benefit from changes in exchange
rates.

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 1.470ish and is currently
1.481ish. Sterling has regained the cent it lost last week

Interest rate increases in Euro land receded to next year
allowing the slight strengthening in sterling.

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 somewhat
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
and we may have this with the breach of the 1.19 US$/Euro
exchange rate mentioned above.

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 1.774.It is now 1.750. The period of
consolidation may have come to an end with a 2 cent strengthening
in the US$ in the last few days. US$1.73ish is a key level and
we wait to see if the US$ can breach this level.

Further interest rate increases which are now expected to exceed
original predictions given the high level of inflation in the
USA are lending further support to the US$. However, we still
have to be wary as the twin deficits of budget and balance
payments as these mean that the USA is very dependent on external
parties buying dollars.

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 over the week from 2.365 to 2.387ish but
overall the Aus $ still appears to be in a strengthening trend.

Although the negative sentiment surrounding the Aus$ has increased
in recent weeks it is likely to take their lead from the US$.
A retesting of the 2.27 level seen in July could be on the cards.

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 2.07 at the end.
Minimal 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$. They also have a positive balance
of payments as opposed to the USA and Australia.

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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