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Sterling GBP to AUD, JPY, USD

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Tuesday, 07 April 2009 00:37

Today we have lots of news from different areas of the world. The combining factor seems to be that the global recession shows little sign of releasing it"s grip on the world economy, and many different economic zones are suffering as a result. This is causing unprecendented volatility in the markets, as currencies become stronger or weaker depening on the view of each economy. Let"s take a quick global tour and see how the economic news that we see every day actually affects exchange rates:
USA
The weakness of the dollar was very short lived yesterday, with exchange rates for Sterling to Dollar dropping away from 1.50, and settling this morning at 1.4725. As mentioned in yesterdays post, spikes in the market are often very short lived, and it is the buyer that has their trading facility open and ready to use that is in a position to take advantage of better rates.
GBPUSD is now significantly better than this time last month as you can see from the chart.








With lots of UK data released today, rates for the dollar could continue to fall away. The longer term view is that USD will become weaker, but when is another matter. Some reports suggest rates will climb, but not until the end of 09. I personally expect no significant recovery until 2010. So, if you want to take advantage of the still very high buying levels, Get in touch today to find out how to open a free trading facility, with no obligation.
Australia / Japan Interest Rates
The Reserve Bank of Australia has cut interest rates to a near 50 year low last night. The rate was cut by 0.25% to 3%. Most analysts had been predicting no change to rates. However despite this, the GBPAUD rate has seen little movement which has surprised me. After briefly spiking, rates actually continues to fall. This can possibly be due to little strength left in Sterling.

Japanese Yen JPY
Japan announced yesterday that it is to pump more than 10 trillion yen (about £66 billion) to try and combat the recession. This comes after they have already put 12 trillion of spending into the economy. This new figure represents 2% of their output.
Exports have almost halved as demand for its products has fallen. The economy shrank by 3.3 percent at the end of last year, and figures also released in recent weeks show retail sales saw the biggest fall in 7 years. On top of all of this, unemployment has also risen to 4.4%.









So, all is not well in Japan. The bad news has though helped weaken the Yen, and exchange rates have risen dramatically this month. An 8% increase is massive in just a few weeks. If I had to buy any Yen in the next 6 month, I"d be seriously considering a Forward Contract.

Russia
Russia announced a foray into quantitative easing yesterday, with Vladimir Putin announcing 3 trillion rubles (£6 billion) in a package of aid measures to help russia ride out the global recession. The World Bank in March predicted that Russias economy will shrink by 4.5 percent this year. Also, as Russia is a major producer and exporter of oil, falling energy prices will likely put pressure on the russian currency also.

GBPEUR
We have lots of data for the UK today, which may well cause some movements in Sterling to Euro Exchange Rates. At 09:30am we have some industrial production data, and also manufacturing production data.

This should give a good insight into the health of these sectors of the economy. Later at midnight we have a UK GDP estimate, and also the Nationwide consumer confidence release. Lots here that could cause rates to move if the figures are not as expected. We also have some GDP data for the EU released at 10am.
Contract Types
It"s impossible to predict which way GBPEUR rates will go, however we have various contract tools available for clients to buy at levels not currently available with a Limit Order. Protect yourself against falling rates with a Stop Loss. Lock in todays exchange rates for a small deposit for up to 2 years with a Forward Contract. Or, simply buy your currency outright with a Spot Contract.
Get in touch for detailed information on our different contracts, and to discuss your particular requirements.
If you are looking to make a transfer abroad, and would like to find out more about Foremost Currency Group, then simply click on the link below to visit our main site.

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3.23 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."

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