Dear Charles,
Weekly currency note:18th November 2005
Overview
Sterling suffered badly this week as interest rate
expectations reversed. Previously it was thought interest
rates could rise as inflation increased. The new thought
process is that rates are now more likely to fall. Please
note the lack of exactitude [is this really a word, my
spell check seems to think so] in the above. There is only
a change in expectation. We may well see no change in
interest rates in the UK for the next 6 months. However
interest rates are rising in the US and the US$ continues
to strengthen. The Euro has moved to the lower of the recent
narrow range. It will be interesting to see if the Euro can
maintain its short term momentum.
Why is currency management so important?
One client bought at the end of last week and even though
his funds were not available until this Friday we were able
to secure him an excellent rate. In the space of one week
he saved over £3,000.
That is why a currency strategy is so important. It 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 1.485ish and is currently 1.461ish.
I was right last week; it was an excellent buying opportunity
for the Euro. Now may be the time to sell.
As noted previously, 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 has
tightened in the last few weeks to 1.46 to 1.485. We are now
at the bottom of this range.
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 1.739.It is now 1.716. As noted, US$1.73ish is
a key level and we wait to see if the US$ breach of this level
can be sustained.
Further interest rate increases, which are now expected to exceed
original predictions given the level of inflation in the USA, are
lending further support to the US$. However, we still have to be
wary as the twin deficits of budget and the balance of payments
[which is still growing] as these mean that the USA is very
dependent on external parties buying dollars.
Momentum, purchasing parity and rising interest rates support my
inclination for further strengthening in the US$ 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 strengthened slightly over the week from 2.375 to 2.342ish.
The Aus$ is tracking the US$ and 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 its 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 2.07 at the start of the week to 2.04 at the end. Tracking
the US$.
The Can$ 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. This would mean a whole new world for the
“loonie” as the Can$ is known.
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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