Monthly Archives: March 2012
Will the Euro finally enjoy some strength?
Today there is a whole host of Eurozone data including Eurozone inflation at 09.00, in my opinion the biggest data release. Inflation above the European Central Bank’s own target is the reason Trichet raised interest rates twice last year and the reason the Euro reached nearly 1.10 on the pound and the high 1.40′s on the dollar last year. A far cry from the current euro rates, now many cents weaker. This release will probably set the pace for movements today, although German retail sales released this morning weaker than expected are keeping GBPEUR close to 1.20 and EURUSD in the mid 1.30′s.
Why now is a good opportunity to sell Euros, Important data today which could move GBPEUR and EURUSD
It is looking more likely that the Eurozone bailout funds will be increased to the €1tn level favoured by some including the OECD. A final decision for this should be clear by tomorrow, when Eurozone Finance Ministers meet in Copenhagen. If approved we may see the Euro strengthen, although I expect the underlying factors to keep the euro relatively stable. German Unemployment is released this morning at 08.55 today, which could present further opportunities for selling or buying Euros.
Later today we have US GDP which is the biggest data release this week. I would expect to see some movement on EURUSD and GBPEUR following this release as the US dollar accounts for 83.7% of all curreny transactions globally.
As I have mentioned previously GBPEUR seems to be having difficulty in breaking below 1.19, partly I feel due to the pound finding favour. EURUSD could easily move to the 1.35 mark today but movements on USD can be very unpredictable!
As well as offering award winning commercial rates above other brokers and the banks, we can offer assistance with the timing of your trades to help you maximise your exchange rate. Unfortunately I cannot predict the future (I would probably not be writing this blog if I could!), but I can make you aware of not only all your options, but all the important events and themes surrounding your currency exchanges.
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What can we expect for the Euro this week?
Euro exchange rates have rallied in the early part of the week against the US dollar shifting close to the 1.34 level. Much of the move can be attributed to a weaker dollar following the dovish tone of the Chairman of the Federal Reserve (FED) indicating further monetary stimulus could be required. Ben Bernanke indicated that further movements in the US labour market would require faster economic growth prompting rumours that further QE (Quantitative Easing) might be on the horizon. The subject of QE has been written about on a number of occasions on this blog and regular readers will be aware of the potential impact this might have on the currency involved. Should we see further QE in the US you would expect to see the USD weaken further, however this may just simply be rumour at the moment and I would expect the US dollar losses to be curbed in the coming days and the EUR/USD level settle back towards 1.33.
For clients with an interest in EUR/GBP we have remained range bound between 0.8265 and 0.8475 (1.21 and 1.18 respectively) for the past few weeks. Resistance appears to be set at 1.21 and I cant see the pound breaching this level and would still see the opportunity to buy at 1.20 (0.8333) as a good one. Data this week that is likely to impact this pair will include UK GDP data released tomorrow at 09:30, this is the final revision from quarter four of last year and is likely to confirm the -0.2% figure indicated in the previous revisions. We also have CPI (Consumer Price Inflation) data from Germany at 13:30 (expected to fall month on month from 0.7% to 0.3%). A figure such as this will suggest the European Central Bank is likely to keep interest rates on hold at 1% in the coming months and you may find a small sell off for the Euro following this. Other data of interest will be unemployment figures from Germany on Thursday (at 08:55) and economic confidence figures from Europe also released Thursday (at 10:00).
Data sets can have a major impact on the short term movements for currency, should you wish to discuss the potential implications for your transfer then please contact me at mgv@currencies.co.uk and I will happily discuss my views and the service we provide in more detail.
GBP EUR Rates Flirt With 1.20
Sterling Euro exchange rates have been flirting with 1.20 for the last week with big spikes on Monday and yesterday. Much of the movement has been due to slightly better than expected data in the UK in recent months and continued trouble in the Eurozone with news like Spain’s missing its deficit reduction targets and Ireland re-entering recession. However it has not all been plain sailing for the pound against the single currency with recent retail figures significantly down it highlights the UK economy is by no means out of the woods, simply the tree line has got a bit thinner. The Bank of England Minutes reinforced this view with two members voting for an increase in the Asset Purchase facility (Quantitative Easing). In all I do think 1.20 will be achievable for clients as it has been earlier in the week but I don’t expect the pound to push on much further against the Euro because of the inherent problems in the UK economy. If you are looking for an exchange rate of 1.20 to buy Euros then why not look at a limit order. Get in touch by e-mailing Colm at cmg@currencies.co.uk and quote ERF in the subject matter with a brief overview of how much you want to exchange and timescales. I would be happy to explain our trading process with no obligation placed upon you- just the ability to get a better exchange rate!
The Dollar has weakened against the Euro of late due to an increase in global confidence resulting in investors moving away from the safe haven of the Dollar and looking for higher returns elsewhere due to greater risk appetite. High oil prices and tensions in the Middle East have exacerbated the USD weakness due to US demand on oil – Obama did announce greater levels of oil production in the US but I think this slackening on the Dollar will remain as long events in Europe don’t blow up again imminently. As such trading around 1.32 to 1.33 for EUR USD however if you would like a level above this by all means let us know and on e of the team here would be happy to monitor the rate and contact you at the appropriate time. Simply e-mail Colm at cmg@currencies.co.uk and quote ERF in the subject matter with on overview of the Euro Dollar trade you need to do.
When will the Euro strengthen against the pound?
When will the Euro strengthen against the pound?
Well it is strengthening as we speak. Rates move every 2 seconds for a multitude of reasons. Daily fluctuations can be 1-2 cents, sometimes more. What I want to explain here are the more fundamental reasons why rates are where they are. I currently have many private clients and businesses who perhaps sold properties or agreed contracts last year in Euros. With the Euro rather comfortably at its weakest against the pound in over a year and a half, clients in this position are right to ask when will the Euro strengthen against the pound?
I personally cannot see any kind of a return to last year’s levels at 1.10-1.15 (0.869-0.90) anytime soon. I would personally be shocked to see this happen and there is one key reason for this clients in this position need to be aware of. That is Interest Rates.
Interest Rates – Interest rates are a key factor in determining a currency’s strength. Just like a higher rate for savers will attract investment into a bank account, the higher a central bank’s interest rate, generally speaking the stronger that currency will be.
The European Central Bank (ECB) last year raised rates twice in April and June by 0.25%. Here at eurorateforecast.com we questioned the decision as a higher interest rate can stifle growth. Growth in the Eurozone as we are now seeing is a much bigger problem, arguably because of the rate hike last year. These hikes took the Eurozone interest rate to 1.5%. Once implemented we saw the Euro strengthen, reaching a peak of 1.1052 (0.9048) in July 2011.
In Autumn the new ECB President Mario Draghi swiftly cut rates twice in November and December signalling an intent to promote growth. A lower interest rate can increase growth as lending to businesses and consumers is cheaper and this should encourage private and corporate spending which will all help to stimulate growth and boost an economy. This is something in my eyes which is desperately needed in Europe to help the weaker nations.
Predictably enough following these two cuts we saw the Euro weaken. An early Christmas present for those buying Euros, a Christmas nightmare for those selling… A nightmare which has continued into 2012 and whilst we have seen the rate move in favour at times for those selling Euros (rates will always fluctuate as described above) until there is a big change in the fundamental reasons for current rates, I don’t believe we will see a move towards the 1.10-1.15 (0.869-0.90) levels anytime soon, if ever again.
As well as the fundamentals surrounding the interest rate differential between the pound and the Euro, the fact the Euro continues to be under pressure due to the debt crisis and the pound appears to be finding favour as economic conditions slowly zig zag to improvement, I would be weary holding Euros hoping that you will suddenly see major movement in your favour.
As a specialist currency broker I am very experienced in handling large volumes of money for both private clients and businesses. When making such decisions on currency, being unaware of all the events surrounding your rate and all your options can prove very costly.
If you are watching the rate just hoping it will move in your favour you may find it useful to talk to us as we can help explain what is driving your rate as well as keep you informed of upcoming events that may provide the little bit extra you are looking for. We have never had trouble offering any of the 20,000 plus readers of this site, who contact us, the best rate, better than their bank or current broker.
We write this site for the benefit of anyone who needs to make a currency transfer and wants to know more about what is driving their rate and what may happen in the future. If you have any questions or queries on the markets I will be more than happy to personally explain exactly what is happening and how you can benefit from the volatility, not suffer. Please feel free to contact me directly on jmw@currencies.co.uk
I look forward to hearing from you
GBP/EUR – little movement following UK budget
Earlier today George Osborne the UK chancellor announced his 2012 budget and the market did little to react, in fact leading to slight GBP strength in the afternoon session. Earlier in the day the Bank of England had released their latest minutes which showed that two members of the monetary policy committee (MPC) had infact voted for an extension of quantitative easing (QE) at the interest meeting held at the beginning of the month. This was a little surprising and subsequently GBP/EUR levels headed back towards 1.19 in the early session. This losses were short lived as by close we have seen the market head back above the 1.20 mark.
What now for the Euro?
For many the market was a little surprised that two members of the MPC voted for an extension of QE and it will be interesting to see the approach of the Bank of England in April, this may weigh on any gains for the pound against the euro in the short term and 1.20 still, to me, represents relatively good value in the current climate. As for the direction for the Euro, much of this will hinge on investor confidence and this has taken a slight backward step following the downbeat forecasts of China. Yesterday there were fears that the second largest economy in the world is slowing, a report showed that home prices in Chinese cities cities fell last month and demand for raw materials within China are set to fall. Subsequently investor confidence has fallen a touch and ‘safe haven’ currencies such as the USD could benefit and riskier currencies such as the Euro weaken. I believe this trend, particularly between EUR/USD could easily be seen in the short term and I would expect a move towards 1.31.
To discuss your fx exposure and potential transfer in more detail please do not hesitate to contact me at mgv@currencies.co.uk
Spain on a negative outlook… What lies ahead for EURUSD and GBPEUR?
GBPEUR has hit the 1.20 mark again as confidence for the pound improves. And as the USD has weakened on risk sentiment EURUSD has hit 1.32+. The expectation is still that continued Euro weakness will lead to further opportunities for buyers and bad news for sellers on the pound. On EURUSD if the dollar keeps weakening I can only see it becoming worse for USD sellers, EUR buyers.
Tomorrow we have the UK budget which could well weaken the pound and may put an end to the pound’s recent run of form. If you are concerned about rate movements why not speak to us to be kept up to date with the latest news here?
Moody’s the ratings agency have confirmed the dire position of Spain, having placed them on a negative outlook owing to the huge challenges ahead for the government to cut spending. It is becoming apparent the Eurozone is facing a huge financial crisis with no real end in sight. The outcome is impossible to predict but the affect on the euro rate could be significant.
I expect that the Euro will continue to be under pressure as negative news continues to spread. I read this weekend of news that in Greece customers to the theatre and cinemas have taken to bartering since the tickets are unaffordable. I have to sympathise with the Greek in the street who has done nothing directly to warrant his position, just as I sympathise with the German tax payer who again has done nothing directly to affect events.
EURUSD - The weakness for the US dollar relates to improving global sentiments on the global economy. The immediate threat of economic turmoil appears to have been averted and as such this is good news for anyone selling euros.
GBPEUR and EURUSD are both fluctuating wildly according to almost daily changes in sentiment on the markets. Making predicitons is particularly difficult at the moment, but if you are considering making a transaction we can help make you aware of all your options so you don’t get caught out if things take an unexpected turn.
If you would like to find out more about all your options please feel free to contact me direct on jmw@currencies.co.uk
I look forward to hearing from you
ECB Montly report this morning – expect volatility
Yesterday GBP exchange rates started strongly against a basket of currencies and in particular posting further strong gains against the Euro to follow the 1 cent jump shown on Tuesday. This brought levels to just ½ a cent shy of a near 18 month high and again, to me, must represent a good buy opportunity. This argument was further cemented following the release of the UK unemployment data yesterday highlighting the claimant count (the number of people claiming unemployment related benefits) rose at a faster rate than expected. Unemployment rose by 28,000 between November and January, taking the jobless toll to 2.67 million, or 8.4%. To compound this Fitch (the credit rating agency) downgraded Britain’s AAA rating from stable to negative This suggests the UK is going to face a difficult couple of months to avoid recession, a factor that could seriously hamper any further gains for the Pound against many major currencies.
ECB Monthly Report
For any client with a short term Euro requirement this morning’s ECB (European Central Bank) monthly report should be viewed with interest and caution. Similar to the Bank of England minutes, the report will show how the ECB voted with regards to interest rates earlier this month, and the central banks longer term views regarding monetary policy. The report is due for release at 09:00 and should the tone of the report take a bullish (positive) stance I would expect the Euro to strengthen following the release, likewise should the report represent a hawkish tone in terms of interest rates i.e. suggesting a rate hike in the Europe is not far round the corner, this would typically lead to Euro strength and the recent good run we have seen for GBP/EUR could evaporate quickly with a move back towards 1.19.
As David Cameron arrived at the White House for talks with US President Barack Obama both leaders said the relationship between their countries was the strongest it has ever been. Unfortunately the same cannot be said about the respective economies however recent data from across the pond has suggested the US is on the up. Tuesday’s retail sales were at their highest in 5 months and some are saying the first green shoots to US recovery. If this is the case we could actually see the dollar weaken as investors’ confidence increases and the demand for ‘riskier currencies’ will improve. This would tend to suggest a move in favour of currencies such as the Euro, and the Australian and New Zealand dollar and I would expect the values of these currencies in particular to improve, (although with the NZD and AUD losing nearly 1.5% and 0.7% against the pound respectively this trend may not have started just yet!)
Should you wish to discuss your individual transfer in more detail and would like to run through the service we provide please email me at mgv@currencies.co.uk
Euro at strongest levels against US dollar and Pound in three weeks
Euro exchange rates have posted some strong gains in recent weeks and yesterday continued the trend bringing levels below 1.19 for EUR/GBP and close to 1.32 for EUR/USD. Will this trend continue? Personally in the short term I think yes, however Europe still has many underlying issues and I feel longer term we will see Euro losses breaching above the 1.20 mark against the pound and heading below 1.30 against the US dollar. For anyone selling Euros at the moment I therefore believe this short term spike could represent an opportunity to secure your position at an attractive level. The market has now remained range bound between 1.18.50-1.21 for nearly three months and yesterday was the first breach of the 1.19 mark since the 24th February. Should you wish to take advantage then email me direct at mgv@currencies.co.uk. Even should you not have full availability of your funds you can lock in guaranteeing your exchange for a set period of time for a small nominal deposit.
Data to affect the Euro this week
Today we have the ZEW economic sentiment survey from Germany and the Euro zone – this is an economic think tank and will give views as to the general optimism of investors within Europe and the largest European economy, Germany. Figures are released at 10:oo and should be closely watched by anyone with an interest in the Euro.
Tomorrow at 10:00 we have consumer price inflation figures from Europe (will give an insight into future movements with regards to monetary policy within Europe) and Industrial Production figures also released at 10. Industrial production figures are expected to increase sharply from last month indicating the European economy is on the up and may lead to further short term Euro strength.
Finally on Thursday and possibly the most important release will be the European Central Banks monthly report. This is a detailed report from the central bank as to economic sentiment within the euro zone and again will give any insight the bank might have with regards to monetary policy (interest rates) and other policies the bank may adopt to include quantitative easing. This release is set for 09:00 GMT.
Should you wish to avoid these data sets or discuss the potential outcomes in further detail email me at mgv@currencies.co.uk
‘If you were looking at the current news and outcome of the agreed Greek bailout as a ‘gift’, perhaps you should also ‘beware’…’
So technically Greece is now in ‘default’. This is according to the ISDA (International Swaps and Derivatives Association) who oversaw the deal and Moody’s, the credit ratings agency. Contrast this with French President Merkozy who claims ‘the problem is solved’…
This wide disparity is clearly confusing for everyone involved so let us try to explain a bit further in the hope we can learn more on what lies ahead. For me it looks like the serious issues for the Euro are only just beginning. The uncertainty we saw last Autumn and before Christmas may begin to look like a picnic before this year is up..
If Greece has defaulted why has the Euro rate not moved?
The groups stating this do not have as much economic influence as those championing what has happened. Credit ratings agencies long ago lost respect by investors and despite the now weekly downgrades and warnings actually have very little effect on the market. The ISDA (mentioned above) represents the interests of private bondholders so it is only natural they view the forcing of investors to take losses, as a ‘credit event’, i.e a default. The rate has not really responded because the market long ago expected this scenario. Markets move due to the unexpected and to arrive at where we are today is not all too suprising. I think we will need to see the dust on Friday’s events before any key trends emerge. Currently the Euro is finding strength as on the face of it this bailout being agreed is Euro positive. As the saying goes ‘Beware of Greeks bearing Gifts’ – If you were looking at the current news and outcome of the agreed Greek bailout as a ‘gift’, perhaps you too should also ‘beware’…’
This week will be sure to present opportunities on the Euro and other currencies as the fallout from this event continues. It is clear to me this is not the last we have heard of debt problems in the Eurozone! If you need to move any currencies why not check with a specialist all your options. I have been speaking to a number of new clients of this site recently who were all very happy they made contact.
All things considered for the market this week I cannot see the GBPEUR moving above 1.20 and EURUSD moving below 1.30 because in the markets eyes the immediate dangers for Europe appear to have been averted.
I can offer a second opinion and make sure you are fully aware of all your options in these uncertain times. Even if you are happy with your current bank or broker it is sensible to double check. I have never had any trouble making sure clients of this site who need to make a currency transaction get the very best deal. Feel free to contact me directly on jmw@currencies.co.uk
I look forward to hearing from you
Will we see some stability now the debt swap deal in Greece has been agreed?
Regular followers of this blog have probably been aware how often we have been writing of the potential outcomes of a default from Greece or a subsequent agreement, now this has passed through what next for the Euro? In theory this should lead to a degree of stability back in the market and you may find a degree of support for the Euro, however the fact that only 85% of the creditors agreed to the debt ‘haircut’ there will be a number of angry individuals having to accept a 50% loss against their will. The agreement will bring some much needed relief to the Euro zone and in particular the European Central Bank and the Greek population – in the words of Mario Draghi the head of the ECB, “All in all, we see that great progress has been achieved and simply compare what the situation was in November last year and what it is today”
Super Mario is right, and there appears a lot more confidence surrounding the market with bond yields falling through out the Euro zone, however I will always be a sceptic and feel it undoubtedly will only be a matter of time before the debt problems surface again, in the meantime though it is a relief that the agreement has come through and I feel this will lead to Euro strength in the short term. For this reason those buying Euros may wish to consider their options whilst the buy levels are still close to 1.20 for GBP/EUR as I can see a move towards 1.18.
GBP/EUR – gains little from the BofE Interest rate decision.
The debt deal swap was not the only big data set yesterday as we had the Bank of England release its latest interest rate decision. Rates were kept on hold at 0.5% a move which is likely to continue for many months to come, therefore anyone hoping to see GBP strength from a rate rise may have some time to wait! There was also no announcement with regards to Quantitative Easing and I believe that February’s £50bn extension may be the Banks last. This lead to some small GBP gains yesterday afternoon but these were soon wiped out following the debt agreement.
As specialist currency brokers we are here to try and help you make the right decision as to when is the best time for you to make your exchange. We are more than happy to discuss the types of contracts on offer and run though our individual opinions. Should you wish to find out more about the service we can provide then please email me at mgv@currencies.co.uk
Could the Euro really collapse? Key date for the Euro..
Navigating Euro movements at the moment is akin to going potholing without a torch. You can never be sure what may be around the corner and just when you think you have overcome an obstacle, yet more present themselves! The latest Euro issue concerns the private bondholders of which 75% need to agree to take a cut of over 50% in the value of their debt. Sources tell me this is all a ploy to improve their bargaining position however and it looks more than likely this will be pushed through…
…the Euro is reasonably stable this morning at just under 1.20 with sterling, just above 1.32 buying dollars. Market data later could change all this quite quickly though…
The deadline on the private bond swap is 20.00 tonight but if announced sooner we could see the Euro strengthen, although as I say it does appear to be a done deal and as such the announcement may be priced in.
Perhaps less newsworthy, but more important for me is ECB President Mario Draghi’s speech following the ECB interest rate decision at 13.30. No change is expected for the Euro or UK interest rates today, but we often see volatility around this time and considering all the problems for the Euro at present, Mario’s speech could be telling.
Cental bank Interest rates are hugely important to exchange rates. Generally speaking the higher an interest rate, the stronger the currency. This explains sterling’s general weakness in recent years and the Euro’s strength for the summer of 2011. Those with Aussie dollar interests should note this is why the Aussie is at all times highs against most currencies – it has one of the highest interest rates amongst the leading economies. These monthly decisions have the power to move the market and mere speculation of a possible rate cut or hike, even if months down the line, can cause unexpected corrections on exchange rates as investors move money according to sentiment. Understanding what is happening could well save you money on your transfer as it makes more or less likely that your desired level will be hit.
If you find yourself scracthing your head over the Euro or are unsure about all of the events driving the Euro we can help explain what is happening and how you can protect yourself.
We write this blog to keep the public aware of events that could move their rate, so they can put plans in place to ensure their transfer is done at the best rate possible. If you are planning to move funds in the future and are not sure if you are getting the best rate or how to proceed, why not speak to me direct on jmw@currencies.co.uk
For anyone looking to make an exchange we are award winning currency brokers who can help with not only the very best exchange rates, but also assistance with the timing of your transfer.
I look forward to hearing from you to offer a second opinion, check you are being offered the best exchange rate and in answering any questions you may have on moving money internationally and how to get the best exchange rates.
