- Super Mario
- AUD, ZAR, NZD
The below table shows the market movements for a number of currency pairings in the last 30 days:
|Currency Pair||% Change||Difference on £200,000|
Sterling exchange rates have remained relatively range bound against the Euro between 1.2550-1.2650 for the past few weeks, however today’s meetings for both Central Banks (BofE and ECB at 12:00 and 12:45 respectively) will be key to the short term direction for GBP/EUR, keep in close contact with your currency broker as the money markets are notoriously volatile and we could see some big moves today.
Super Mario – Market Expects
Euro exchange rates have fallen against both Sterling and the US dollar as the market eagerly awaits the result of the European Central Bank interest rate decision and subsequent conference from Mario Draghi. Following Draghi’s statement in August that he will do ‘whatever it takes’ to secure the status of the Euro the market is expecting something fairly substantial from the central bank today to install confidence in the Euro zone.
To me this, and the potential for the ECB to cut interest rates from 0.75% to 0.5% (something that has probably already been factored into the current prices), is likely to determine the short term direction for the Euro. In recent months we have followed a similar path and on each occasion the outcome from the ECB has done very little to dampen the mood of investors and their confidence in the Euro zone. My concern for Euro sellers is that this situation may continue. I personally believe a continuation of the Euro bond buying policy will be seen, however is this not just an extension of policies that are already in place, policies that are clearly not working? I feel the market needs to see something else from the ECB. What this is I am not sure, but I personally think by just continuing with its bond buying policies confidence in the Euro is unlikely to be restored and a move towards 1.27/28 seen for GBP/EUR and EUR/USD towards 1.24. I also feel an interest rate cut, as many expect will also hinder short term moves for the Euro.
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Best exchange rates for cable
GBP/USD exchange rates are currently sitting at a near three month high, is this a good time to buy US dollars or will this upward trend continue? One thing we can be certain of is as the presidential election race gathers pace the dollar is likely to experience some strong movements that can almost be impossible to predict. However short term moves may well hinge on non-farm payroll figures released Friday at 13:30. These figures show the number of people on the payrolls of all non-agricultural businesses and are a good indicator as to the overall health of the US economy, figures are expected to fall and this may drive cable rates towards 1.60 as a result.
AUD, ZAR and NZD
Recently trends for these three currencies have been very much in Sterling’s favour. This week we have hit 3 month highs against the AUD and NZD with both showing gains in the regions of 6% since the lows of August. Substantial gains have also been seen against the ZAR with rates at a two year high earlier this week, a move of nearly 7% since August.
These three currencies are heavily influenced by commodity prices as they are major exporters of raw materials. In particular Australia has been hit with a fall in iron ore prices and also a fall in output and demand in China, this has subsequently lead to concerns over future growth prospects for Australia and hence the currency has devalued. The Kiwi tends to loosely track the Aussie (being a major trading partner with Australia) hence the loss in value for the kiwi, and South Africa, also a heavily commodity based currency, has been rocked in recent weeks with a number of scandals culminating in a number of mining strikes.
These started following a clash between police at a platinum mine in mid-August resulting in the death of 12 miners. Following the clashes tension has been high and this may have gone some way to explaining recent losses. I for one feel the pound could well continue its mini surge, although a 6% gain in 6 weeks against the AUD and NZD and 7% against the ZAR represents a pretty good return.
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