The Australian Dollar rallied yesterday after confident comments from their central bank hinting that there is an increased likelihood of an interest rate rise next month.
This is likely to make the Aussie get more expensive to buy as investors begin to move money into the southern hemisphere in the anticipation of greater yields.
This may be an opportune moment, if you need to buy Australian Dollars in the future, to consider the benefits of a forward contract which allows you to lock in and secure exchange rates for up to two years in the future.
Thursday, 26 November 2009
Tuesday, 17 November 2009
US retail sales up but Sterling sees gains
US retail sales rose by more than expected in October, largely due to a resurgent car market figures showed yesterday. Sales rose 1.4%, rebounding strongly after September's 1.5% fall. Both months' figures were dominated by the impact of car sales. Taking out car sales, overall retail sales rose by just 0.2% in October, underlining the fragile nature of the economic recovery.
Consumer spending makes up 70% of GDP, which is the broad measure of U.S. economic activity. The retail sales data are an important indicator of consumer spending and if it shows that the figures are slowly starting to rise investors will start to move towards riskier assets and away from the relative safe-haven of the greenback.
sterling weakened on the back of the better than expected U.S. retail sales at first but then FED chairman Bernanke had a speech during afternoons trading stating that U.S. interest rates are likely to remain low for "an extended period," which lead investors to eventually conclude that Fed monetary policy will remain loose for a long time helping sterling gain to nearly a three month high against the Dollar.
What with sterling gaining against the USD and Euro yesterday all eyes will be on the BoE minutes which will be released on Wednesday to see if there are any clues to whether there could be more quantitative easing. If there were more votes to extend more vigorously we could see the gains of yesterday eradicated very quickly so stay in contact with your account manager so we can keep you updated with every data release throughout the course of the day.
Consumer spending makes up 70% of GDP, which is the broad measure of U.S. economic activity. The retail sales data are an important indicator of consumer spending and if it shows that the figures are slowly starting to rise investors will start to move towards riskier assets and away from the relative safe-haven of the greenback.
sterling weakened on the back of the better than expected U.S. retail sales at first but then FED chairman Bernanke had a speech during afternoons trading stating that U.S. interest rates are likely to remain low for "an extended period," which lead investors to eventually conclude that Fed monetary policy will remain loose for a long time helping sterling gain to nearly a three month high against the Dollar.
What with sterling gaining against the USD and Euro yesterday all eyes will be on the BoE minutes which will be released on Wednesday to see if there are any clues to whether there could be more quantitative easing. If there were more votes to extend more vigorously we could see the gains of yesterday eradicated very quickly so stay in contact with your account manager so we can keep you updated with every data release throughout the course of the day.
Monday, 16 November 2009
Sterling outlook
Sterling exchange rates remained volatile last week particularly after Mervyn King suggested that a weak Pound would help the UK economy recover. This, in a week where the Eurozone came out of recession and a widening US trade deficit suggesting Americans are spending again, is weighing heavy on the British currency and may lead to further exchange rate losses in the weak ahead.
Date out this week includes New Zealand PPI, Japanese GDP, UK Rightmove house price index, US retail sales and UK retail price index figures which means we could see another turbulent week.
To keep up to date with what is going on the UK and around the world link to this blog where I will publish a daily market snapshot alternatively visit www.currencies.co.uk where you can open a free, no obligation trading facility giving you access to a personal currency broker who will personally keep you aware of market trends, spikes and conditions.
Date out this week includes New Zealand PPI, Japanese GDP, UK Rightmove house price index, US retail sales and UK retail price index figures which means we could see another turbulent week.
To keep up to date with what is going on the UK and around the world link to this blog where I will publish a daily market snapshot alternatively visit www.currencies.co.uk where you can open a free, no obligation trading facility giving you access to a personal currency broker who will personally keep you aware of market trends, spikes and conditions.
Friday, 13 November 2009
Exchange rate update
Yesterday morning the ECB released their monthly report, which like the BoE’s report on Wednesday highlights future inflation and growth forecasts. The ECB's latest Survey of Professional Forecasters (SPF) said that inflation levels are likely to remain below the ECB’s 2% target right through to 2011, with the annual forecast ranging between 1.7%-1.9%. These figures will give the ECB little reason to raise interest rates any time soon, much like the BoE as the central banks would typically combat low inflation with a rate cut as opposed to a rate hike. The SPF said that the Euro-zone would recover at a ‘gradual pace’ in 2010 with expected growth of 1% over the year. This reflects recent comments from ECB president Jean-Claude Trichet.
Industrial production in the Euro-zone rose for the fifth consecutive month as output increased by 0.3% from the month of September. Figures were slightly short of the 0.5% forecast but this still supports the view that the 16 countries are now collectively beginning to recover from their deepest recession since World War 2.
GDP (Gross Domestic Product) data for the Euro-zone is due out this morning at 10:00am, and is expected to confirm growth of 0.5% in the 3rd quarter of 2009 which will officially announce the Euro-zone as out of recession.
Industrial production in the Euro-zone rose for the fifth consecutive month as output increased by 0.3% from the month of September. Figures were slightly short of the 0.5% forecast but this still supports the view that the 16 countries are now collectively beginning to recover from their deepest recession since World War 2.
GDP (Gross Domestic Product) data for the Euro-zone is due out this morning at 10:00am, and is expected to confirm growth of 0.5% in the 3rd quarter of 2009 which will officially announce the Euro-zone as out of recession.
Wednesday, 11 November 2009
Sterling exchange rates suffer
The UK economy has "only just started" along its road to economic recovery, according to Bank of England governor Mervyn King. In the inflation report released yesterday, the BofE suggested it would be late 2011 before the UK economy recovered to the level it was at before the recession.
"The past year has been extremely painful for most economies around the world," said Mr King "There is a more buoyant picture looking ahead that is encouraging. But this does not alter the extent of the challenges facing the economy."
The pound fell immediately against both the euro and the dollar following the report, on the expectation that interest rates in the UK will remain at 0.5% for some time, this pattern continued throughout the day with Sterling losing significant ground against all major currencies.
"The past year has been extremely painful for most economies around the world," said Mr King "There is a more buoyant picture looking ahead that is encouraging. But this does not alter the extent of the challenges facing the economy."
The pound fell immediately against both the euro and the dollar following the report, on the expectation that interest rates in the UK will remain at 0.5% for some time, this pattern continued throughout the day with Sterling losing significant ground against all major currencies.
Wednesday, 4 November 2009
Sterling exchange rates improving
After a pretty slow start yesterday the Pound gained ground against virtually all currencies yesterday, mainly after the US markets opened just after lunchtime here in the UK.
Some of this momentum may have been as a result of the Halifax house price data release which announced that house prices rose 1.2% in October. They did suggest that this growth was unlikely to be sustained as more and more people seem selling to put their houses on the market increasing the demand for each property and as a result the asking price.
With numerous pieces of economic data about house prices in the UK coming out every month from institutions including the Royal Institute of Chartered Surveyors and Nationwide all with slight variants as to how they measure their data one in isolation can at times be taken with a pinch of salt. However over a period should we see consistent positive results we would expect to see some significant Sterling strength on the back of it with opportunities to purchase currency at rates well above where we see them now.
Some of this momentum may have been as a result of the Halifax house price data release which announced that house prices rose 1.2% in October. They did suggest that this growth was unlikely to be sustained as more and more people seem selling to put their houses on the market increasing the demand for each property and as a result the asking price.
With numerous pieces of economic data about house prices in the UK coming out every month from institutions including the Royal Institute of Chartered Surveyors and Nationwide all with slight variants as to how they measure their data one in isolation can at times be taken with a pinch of salt. However over a period should we see consistent positive results we would expect to see some significant Sterling strength on the back of it with opportunities to purchase currency at rates well above where we see them now.
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