Monthly Archives: May 2012
US GDP Figures Cause Market Concern and Eurozone set-up Unsustainable Claims Draghi
US GDP figures were released today and made for uninspiring reading, causing the markets to shake as a result. The US economy grew by 1.9% in the first three months of 2012, down from the predicted 2.2%. The US economy is often seen as a barometer for global economic strength, therefore meaning investors will have a higher risk appetite if they feel US economic data is improving. Similarly, when US data is poor investors will shy away from the riskier currencies, such as ZAR, NZD and AUD and move their money back to the USD. This is because it is seen as a ‘safe haven’ currency, due to the fact it holds its value in times of global economic unrest.
The results of the US GDP figures seem to have caused some concern within the markets, as the Dollar has strengthened significantly against both GBP (1.5405) and the EUR (1.2359). The prediction is for growth to improve in the US for the remainder of 2012 at approximately 2.5%. This could give the global markets a boost, as investors will see the upturn in the US economy as a reason to be hopeful that this strength, will be mirrored in the global markets.
Personally I feel the USD will be range bound between 1.54-1.56 against GBP and 1.23-1.25 against the euro, as the markets wait for news in the build-up to the Greek elections before deciding which direction they will take next.
In Europe, the underlying issues that are weighing down the whole region do not seem to be lifting. Greece are under serious pressure to form a government, both willing and capable of instigating the ECB’s required austerity measures and Spanish bonds sales are creeping dangerously close to the 7% mark, causing major concern for EU leaders. Today European Central Bank (ECB) president Mario Draghi, informed eurozone figureheads that they must decide what they want the bloc to look like in the future, because the current set-up is ‘unsustainable’. He went on to say the ECB could not ‘fill the vacuum’ left by governments on creating growth or structural reforms. I think we will see GBP/EUR rates range bound between 1.2450-1.26 in the build-up to the Greek elections in June.
If you have an upcoming currency requirement or would like to be kept up to date with the current market trends please contact me at mtv@currencies.co.uk or on 01494 787 478.
Euro weakness persists… How can they solve this crisis?
The Euro has been pushed further to new lows against the pound and the Dollar as investors fear continued uncertainty surrounding the resolution of any crisis. The interest rates on pretty much all European bonds shot up, with German, Spanish and Italian yields catching headlines.
I think that these problems are only going to persist and the only way to stop this is for the ECB, Germany and others with the power to move the market, to undertake some of the following steps.
EUROBONDS – Put all of the Euro currency governments borrowing on the same footing. Increases the rate for Germany but allows cheaper borrowing by troubled economies. Although the Germans are adamantly opposed, the measures are gathering support.
ECB to act as lender of last resort – The ECB does not guarantee the banks or governments in the Eurozone. Were they to undertake such a stance the markets would immediately settle as investors had confidence that the troubled economies had room to grow their way out of trouble. A huge step but not inconceivable.
Other measures include expansion of the EFSF and EFSM to allow them to cope with possible bailouts for Spain and Italy. But even by undertaking these measures the troubled Eurozone economies would not necessarily grow for many years however.
The measures needed to rescue the troubled economies and shore up those looking wobbly are quite staggering and will put some areas of the Eurozone in a stagnant period of awful austerity for possibly a decade. Already in Greece I am hearing of middle class professionals struggling to get money for food etc, the outcome of these elections is of huge importance.
Abandoning Greece is not in my opinion an option but what else will the Europeans do? This dire situation is really weighing down the Euro rate and we are already seeing the effects on international trade. China have announced further stimulus measures to protect their economy and the US and UK regularly moan about the effects a weak Europe is having on their recoveries and the global economy.
One thing is clear the status quo will not remain. We could be at 1.30 on GBPEUR or 1.15 in the next few weeks. Likewise on EURUSD we could hit similar levels depending on the outcome of the elections and the European leaders attitudes to how to solve the problems.
If you are one of the thousands of people who read this site regularly and would like to find out more about all of your options in these uncertain times, then please feel free to contact me Jonny personally or make an enquiry using the form. Being aware of all your options and the future trends and events on the rate is very likely to save you money on your currency exchanges so why not find out for free and at no obligation how we can assist.
My personal email is jmw@currencies.co.uk or you can call 01494 787 478 and I look forward to hearing from you.
Why I think the Euro will strengthen soon, although longer term I expect the pound to make gains…..
As the poster child for the EZ debt crisis, there will continue to be limp attempts to contain the Greek crisis and keep them in the Eurozone. To let them go or have them leave will be disastrous for not just Europe, but the global economy. I think that Greece will stay in the Euro and once the fallout of the elections dies down in the next few weeks we will see a more accommodating stance by the ECB. I predict the pound will actually start to suffer a bit in the coming months too as further QE is unleashed and we should hit the lower 1.20′s before or by the Autumn once short term solutions for European liquidity and debt issues are also provided. All that will do however is to stave off problems for another day I believe!
If the UK economy is growing by the end of the year I would expect speculation of rate hikes coupled with resurgent EZ debt issues to push the rate significantly back up at 1.2625 for January 2013
GBP EUR is still currently at over a 3 and a half year high at 1.25+!
EUR USD is at a 22 month low a smidgen above 1.25 too….
If you are considering any currency exchanges please feel free to make use of our free information service to assess your position. We are specialist currency brokers who deal with the markets day in, day out. You can utilise our expert knowledge and currency sources to undercut the banks by up to 4% as well as undercut other brokers. Even if you have a good relationship with another source, speaking to us could well save you money. I have never had any trouble beating other companies rates and it is always worth a second opinion on what you are doing.
To find out more for free you can get in touch on jmw@currencies.co.uk or reach me via the phone 01494 787 478.
How long does Greek realistically have in the Euro? EURGBP 3 1/2 Yr Low, EURUSD 21 month low…
Well not long in my opinion! Rumours are rife on the markets and new feeds today of possible preparations for Greece to soon be leaving the Euro. Statements of course being vehemently denied, but is there any other option now?
These debts can simply not be repaid and it is becoming apparent that funding will soon dry up for the Greek banks and economy. I personally have been inundated by clients with money in Europe looking to move their funds as quickly as possible out of Europe in anticipation of some major Euro weakness.
The Emergency Summit this evening will probably yield very little but will a ‘Grexit’ as it is now being referred, be on the agenda? Greece will surely have to either be forced to leave the Euro or pull out themselves. The summit tonight I hope will provide some answers and indications as to how this will be managed.
Stock markets worldwide are down at the prospect of having to write off Greece’s debts and it is highly likely that whatever happens we will start to see a run on not only Greek, but also other European banks.
We know already that many banks and trading organisations have already made their preparations for the Drachma and I think we could be reaching a real tipping point soon.
The Greek elections are not until next month but it is time for Eurozone leaders to make clear where they stand in relation to Greece and the rest of the single currency. EURGBP is at a 3 and a half year low whilst EURUSD today hit a 21 month low. Some analysts are forecasting 0.769 and 1.20 on both of these rates in the coming days and weeks if this situation is not resolved. It is the inaction and lack of viable or credible options on the table that is creating this uncertainty.
If you are holding Euros and would like to be kept up to speed with this situation and find out all of your options to protect yourself from this clearly deteriorating market, then please feel free to get in touch with me personally, Jonathan Watson on jmw@currencies.co.uk or 01494 787 478. Please also use these details for any media enquiries relating to this situation.
Euro exchange rates have stabilised in anticipation of tomorrow’s meeting between the EU leaders.
The Euro has clawed back some of its recent losses over the last couple of days in anticipation of Euro zone leaders meeting tomorrow in Brussels for an informal summit dinner to discuss a potential growth pact for the Euro zone. They are also supposed to be finding a solution to a looming Greek default which many believe threatens the future of the Euro zone.
I for one feel that this is becoming just another stage show. It seems to me that until European politicians stop arguing between themselves they will never find a resolution to this catastrophic mess. Unfortunately if you need to sell Euros you will find that your currency continues to depreciate unless you act swiftly. Contact me to find out how we can minimise your risk to currency fluctuations at bma@currencies.co.uk
No matter where you are in the Euro zone have a thought though for the expats in Greece. It is thought that if a resolution is not met soon and the election favours the anti austerity there will be no other solution but for Greece to leave the Euro and the likelihood is, that their wealth will be halved in value through depreciation in their funds.
My recommendation would be that if you have Euros sitting in a bank account in Greece for safety reasons convert them back to sterling and bring then back to the UK. When things settle down you can then look at moving them back to either the Euro or Drachma depending on how events unfold.
Below is an outline of some the contract options that may suit your requirement. if you feel that any of these may help you with your currency exchange please feel free to contact me at bma@currencies.co.uk and we can discuss the contract options that may be best for your circumstances.
Spot - We trade on the ‘spot’. Settlement is due with a few working days and the money can be sent immediately.
Forward - We book todays rates forward for up to two years. A small deposit is required. This guarantees your rate for the duration and means you do not get caught out if the market moves against you. Very popular for property and commercial transactions.
Limit – You choose a higher level you would like to trade at and we enter an automatic order which we trade at once achieved. Guarantees you get your desired rate.
Stop – The same as a Limit but you choose a lower level you would not like to get worse than. Can be used in conjunction with a Limit and you can move them around or cancel them as long as they have not filled.
Please feel free to email me at bma@currencies.co.uk to explain how we can help assist you in your exchange and get you a better rate than your banks.
Ben Amrany
What options are available on Euro exchanges if Greece has to leave and there is a run on the banks?
It is now looking increasingly likely that Greece will have to leave the Euro. As we have stated here for the last few years their position is becoming impossible. Germany is looking increasingly isolated as the only country supporting the idea of Greece reaming in the Euro. Each day Greece remains in the Euro feels like a lifetime and it is surely only a matter of time before they leave.
We have at least until the middle of June for the next round of Greek elections. According to the polls the Greeks do want to remain in the Euro. They are just very unhappy at the way they are being made to suffer at the hands of austerity.
The major challenge for anyone with Euros in Greece or Europe at the moment is how best to limit the losses which have already occurred and may well get worse in the coming months. In the last few months I have seen a huge increase in the number of clients from Europe selling Euros. Even though the rate is the worst it has been for 3 1/2 years for selling Euros to buy pounds, it could be about to get much worse. Even if the news in Greece is Euro positive I would be suprised to see a massive increase in Euro strength as investors remain concerned about the longer term outlook.
How clients can protect themselves from unfavourable Euro movements in the current climate
Forward Contract – If you are selling Euros down the line you can fix current levels for a future date using a forward contract for up to two years. There is a small deposit as a percentage of the total up front and then the balance payable by a date you set. If selling a property or expecting to receive a Euro payment for goods or services, this option guarantees that you get the level you fixed at. It is hugely popular at the moment and if applicable, should be strongly considered. Contact me directly to find out all of our forward rates on Euros.
Segregated Client Account - Some clients are chossing to utilise a holding account in Euros where they have easy access to the funds. Getting funds out of European banks can be particularly difficult at the moment as they seek to retain their capital levels. You can arrange for the funds to be transferred to this account where they can be traded at anytime. You remain in full control of the funds and we only act under your instruction.
Switch to Sterling – Some clients are choosing to switch to sterling which whilst suffering is not in as bad a state as the Euro. They plan to then either buy back into Europe once things have settled or to just pull out of Europe entirely. For clients living in Greece, this option could allow a windfall should the Drachma be reinstated when rebought once devalued.
I would not expect anything too dramatic on the rate until the Greek elections next month, although all it will take is the wrong or right comments by Merkel et all to set things off once again. There will of course be fluctuations in the meantime but in my opinion the Euro is only heading in one direction. There is increasingly less and less that can be done to reverse the current run of events, and it appears likely that things will probably get worse before they get better, if indeed they do get better.
This site is run by specialist currency brokers to provide information and let anyone who needs to make an international currency transfer know, that there is another option besides your bank. We have never had any trouble making sure clients of this site get the very best exchange rates so why not get in touch to see if we can help you?
For a detailed forecast specific to your personal circumstances please feel free to contact me personally on jmw@currencies.co.uk or 01494 787 478.
I look forward to any comments, questions, enquiries, feedback or stories on your experiences of current events in Europe.
Euro exchange rates continues to weaken on fresh fears as 16 banks in Spain are downgraded
The Euro crisis has gathered some speed this morning with rating agencies down grading Greece and 16 banks in Spain including Santander. Global stock markets have taken a big hit as investors fears gather momentum and look for the safe havens.
The main winner in currency terms is the USD at present. It is strengthening against the Euro at a rapid pace and earlier hit a level of 1.2641. If you are selling USD to buy Euros now seems a fantastic time and if you feel that the rate may go further in your favour you can always place a limit order in the market to help you try and achieve that little bit more. Feel free to email at bma@currencies.co.uk and I can explain the mechanics of implementing this contract. I can also talk you through all the other options that are available to you.
The Single currency has today weakened against all major currencies bar the Aussie Dollar & Kiwi Dollar. It seems that the events in Europe are causing a big sell off of the higher yielding currencies and the Kiwi Dollar is now at its lowest level against the Euro since December.
As Greece’s fiscal and political situation continue to remain unclear I feel that the Euro will continue to remain very volatile. Leaders of the Group of Eight nations will meet near Washington this weekend and are expected to discuss how to deal with Greece, as well as economic growth in the US, China and Japan.
If you are selling Euros at present I would be extremely cautious as at present I can’t see any major swings in your favour. If things do not settle down in the near term you may see a big sell of of Euros and that would continue to dent the single currency. If you have an exchange to make and are worried about the decline of the Euro please feel free to contact me at bma@currencies.co.uk and we can discuss how best to limit your exposure.
Ben Amrany
Greek hangover still weighing on the Euro
Greece is set to go to the polls again after days of coalition talks failed to produce an agreement on a new government. The elections on 6th May, showed a majority of Greek voters backing parties opposed to austerity plans demanded by the EU and IMF in return for two bailouts. Polls suggest the leftist Syriza bloc, which came second in the 6th May vote and rejects all further cutbacks, could become the largest party after a new election. Syriza wants to renegotiate the bailout package but also wants to keep Greece in the euro.
However European leaders say they will cut funding for Greece if it rejects the bailout agreed in March. This would effectively mean bankruptcy for Greece and German Finance Minister Wolfgang Schaueble again ruled out amending the agreement. Yesterday an interim ‘caretaker’ government was sworn in to power led by a former high court judge Panagiotis Pikramenos will take the reigns until the new vote scheduled for the 17th June.
I feel this will continue to heap pressure on the Euro and any Euro sellers, certainly if funds are not liquid, may wish to consider a forward contract to guarantee their rate in advance. For Euro buyers this is potentially good news, however should you wish to take advantage of the current spike (we are trading at a near 3 1/2 year high on GBP/EUR) then a forward contract again might be the sensible option. Alternatively should you still have time on your side and have a particular target rate in mind then why not consider the use of a limit contract. This contract allows you to set a target price and should this level of exchange be reached your position will be automatically bought/sold. These contracts are designed to sit in the market 24/7 to make sure an opportunity is not missed, to discuss this and your position in more detail then please contact Mike on mgv@currencies.co.uk or call 01494 787 478.
Data for the rest of theis week to keep your eye on:
Today is a very quiet day with Bank holidays in parts of Europe. Tomorrow will see German CPI (Consumer Price Inflation) data. These inflation figures are important as they give a useful insight as to what the ECB (European Central Bank) will do with future interest rates. Should inflation be kept under control is gives more scope for rates to stay on hold or potentially fall which may well weaken the Euro further, we are expecting a small drop month on month from 0.4% to 0.3%.
Tomorrow we also have the start of the G8 summit, the meeting of the finance ministers from the group of eight industrialized nations that are the United States, Japan, Germany, France, United Kingdom, Italy, Canada, and Russia. Here the ministers will discuss important economic policy, and I am sure the on going euro zone issues will be top of theuir list so watch this space! To discuss this blog and my views or to run through the service we provide please email Mike at mgv@currencies.co.uk
Euro exchange rates hit fresh lows against the USD & GBP. What will happen with the Euro going forward
Every day there seems to be negative news to come out of the Euro zone which is having a real impact on the single currency. If you are holding Euros to exchange them to pounds or USD you may be finding this time worrying and stressful. The Euro yesterday weakened to fresh lows against the pound at 0.7951/1.2577 and was down against the USD to 1.2680. If this is of concern please email me at bma@currencies.co.uk and I can talk you through the options that may help you limit your loss.
In early morning trading yesterday there was a very small window of opportunity when the Euro did strengthen. This was on the back of some positive GDP data to come out of Germany. Their economy grew more than what was anticipated and this lent some support to the Euro. However this strength only lasted a very small amount of time. By the afternoon the Euro continued its recent trend by weakening to the levels stated above.
Now looking forward with all the uncertainty that is surrounding Greece (It seems like they are going back to the polls) with the anti austerity voters looking at hampering the calls from the EU and IMF. Now the Polls are suggesting that the leftist Syriza bloc could get in and they are opposed to any further cut backs in their country. This is all leaving an awful lot of uncertainty and the biggest loser at present are clients that need to sell their Euros.
Now although the rates are lot worse than last year you have to look at these things logically. There are not many analysts out there that think this situation is going to change in the near term and that the Euro will strengthen significantly for a long time. If you feel that the Euro will fight back please email me at bma@currencies.co.uk and let me know your reasons why. If you are in the mind set of most analysts that think the pound and the US Dollar will hold its ground and linger at the current levels for a good few weeks you may be prudent to look at cutting your loss and get as much back for your Euros as possible. Unfortunately the longer you leave your exchange the worst it may get for you.
If you are buying Euros in the near term things could not be going better. I would be placing limit orders in the market to try and ride this positive wave and see if you can achieve that little bit more. As stated though if you are selling I would be acting very soon. If you would like to make contact you can email me at bma@currencies.co.uk and we can discuss your requirement and the options that are available to you to help you decide when is the best time to make your exchange. We will make sure that teh rates of exchange we offer are a lot more competitive than your high street bank so you will get our expert personal service plus a better rate of exchange.
Ben Amrany
Where is the Euro heading this week? GBP/EUR close to 1.25!
As we head into the beginning of the trading week we have seen the GBP/EUR rates continue in the same fashion as last week pushing on close to the landmark of 1.25 and Euro/dollar push below the 1.29 mark. I feel a trend that is likely to continue, certainly for this week. For anyone selling Euros it is a worrying trend and showing little signs of slowing with the Greek debacle likely to rear its ugly head again. Following the recent elections in Greece the inability to form a Government has heaped pressure back onto the Euro and the possibility of default from Greece becomes ever more likely with many top European bankers considering the possibility of a Eurozone without Greece. Many within Greece are firmly against the terms of the bailout package and should the hard-left Syriza party (polls showed the hard-Left Syriza party on 25.5%, making it the dominant force in Greek politics currently) get into power, the anti-bailout party is likely to stir things up no-end. I for one am still a firm believer that it will remain in the Eurozone for the time being and should Greece leave the zone the process will take years not months, but this is still likely to keep the Euro weak for the foreseeable.
Further problems for the Euro were also seen this morning as Spanish Bonds hit a 2012 high of 6.218% creeping ever closer to the 7% mark that is seen as the benchmark for bailout (as seen by Greece, Ireland and Portugal). The higher the rate on a bond the worse this is perceived for the issuing country as simply the interest returns they re-pay are greater and hence the higher the interest rate the riskier the bond is.
Data of note for those with an interest in the Euro to start the week:
GDP (Gross Domestic Product) figures from Germany at 07:00 tomorrow. Expected to show a light improvement month on month from -0.2% to 0.1% – could lead to short term Euro strength early if as expected, of course if figures are worse then expect further Euro losses.
Following Germans GDP we have European figures at 10:00 – expected to again show a slight improvement from -0.3% to -0.2% – again could have the same impact as date from Germany.
For those with an interest in GBP/EUR on Wednesday watch out for UK unemployment figures at 09:30 (expected to rise from 8.3% t0 8.4%) could hamper the pounds recent gains).
Should you wish to discuss the market in further detail or have an upcoming currency requirement and you would like to discuss the best contract to suit your transfer ranging from a standard spot contract to a forward, a stop/loss, or a limit contract, then please contact me asking for Mike on mgv@currencies.co.uk or call 01494 787 478
Euro still finding life tough… Spainish banking sector next to hit the headlines
So, for those of you holding Euros I would imagine you have had a fairly nervous time of late… It seems every single day there is something new hitting the headlines to make you squirm.
Yesterday it was Spanish banks, the Spanish Government has made the decision to take a 45% stake in troubled lender Bankia. This immediately sparked concern and Spains 10 year bond yield soared back above 6% which is worryingly close to the 7% levels we saw Ireland Greece and Portugal bailed out at.
The one thing with Spain at the moment that may keep them just about avoiding a bailout for now is the fact that their Public borrowing levels are slighly less than theie GDP however will this stay the case if more banks step forward needing assistance.
If you are selling Euros you need to consider the following:
Economic troubles are widespread accross the Eurozone
Political problems may well lead to front page news in the coming weeks and months following news from France and Greece… Economic stability and Political certainty are two of the major factors that effect the strength of a currency.
If you were an investor, would you choose the Euro ahead of Sterling at present? Even with the U.K just slightly in a recession?
Rates are creeping down on almost a daily basis, it may be prudent to seriously consider your options inclusive of a stop loss order, a forward contract (if you are selling a property yet don’t yet have full avaiability of funds) or a limit order in case we see the market bounce back slightly.
I can help you with all of these whether you are a private or corporate client trading any amount from €1000 to multi millions. Feel free to contact me directly djw@currencies.co.uk and I will be more than happy to add you to my ever growing list of satisfied clients.
