This report will address the factors that are likely to affect exchange rates today if you are buying abroad or making a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low over the last month.
|Currency Pair||% Change||Difference on £200,000|
Sterling trading erratically as increasingly bleak data released from Greece
Sterling continues to trade at erratic levels against the Euro as the currency looks to settle, after a 2 day push from GBP that has seen the rate move from 1.2381 on Wednesday to a high of 1.2494 on Thursday.
I would expect very little movement this morning in anticipation of two important data releases from across the Atlantic at 1230. Nonfarm payroll data and unemployment figures for October are likely to indicate just how much of a safe haven the US currently is, which could have knock on effects for the Eurozone and the UK alike.
Mariano Rajoy, the Spanish Prime minister has offered some short-term certainty by declaring that Spain will require no bailout this year, although he did leave the possibility of monetary aid open for 2013. The same news is not however, being emanated from Greece. Recent manufacturing data for October released shows a further decline, and new export orders have descended at a rate not last seen since 2009. Furthermore, recent budget projections indicate that in 2014, the debt/GDP ratio will be above 190%.
Looking forward, Eurozone finance ministers have said there is no guarantee that Greece will receive its next round of aid in a couple of weeks, as deficit targets have not been met. A decision will be made on November the 12th by the Eurogroup, which will hold large consequences for Greece.
If you are concerned about the currency markets, speak to one of our experienced and knowledgeable brokers today on 0800 328 5884 to help protect yourself against any adverse currency movements, whilst maximising any potential gains.
*Key Data Watch* Friday – 0900 –Spanish and German Manufacturing PMI Data
Sterling reaches two week high as US braces for nonfarm data
Sterling hit a two-week high against the Greenback on Thursday as GBP looked to be unaffected by soft manufacturing data released yesterday. The manufacturing PMI (purchasing managers index) for the month of October fell to 47.5, slightly weaker than the anticipated figure of 48, also below 50, which separates growth from contraction.
Sterling reached a high of 1.6173 yesterday, the highest we have seen since mid-October, offering an opportune time for USD buyers.
Looking forward, today sees the release of US Nonfarm Payroll data, which measures the number of people on the payrolls of all non-agricultural business. The consensus is that 125k new jobs will have been filled, demonstrating that the US is getting back on the right track. However, historically nonfarm data has been significantly volatile, and has been known to instigate large market movements due to its difficulty to predict.
Today also sees the release of US unemployment data, anticipated to have increased from 7.8% to 7.9%. I would expect that this will have already been priced into the market, meaning that an unexpected figure could cause widespread currency movements.
With the Presidential elections fast approaching, coupled with today’s data releases it may be prudent to take out a forward contract in order to secure the rate above the 1.60 level. Speak to your account manager today on 01494 725353 who can talk you through your various options.
*Key Data Watch* Friday – 1330 – US Nonfarm Payrolls and Unemployment rate
Healthy Chinese data good news for AUD
China’s economy looks to have steadied, clearing the way for possible growth as we near the end of the year. The HSBC PMI (purchasing managers index) rose to 49.5 in October from 47.9 in September. Despite being short of 50, the level which separates growth and contraction, figures are heading back in the right direction.
This is all positive for AUD as the vast majority of Australian raw material exports are purchased by China. It is well known that Australia is heavily reliant upon these exports, therefore Chinese growth will be welcomed with open arms by Australian officials.
In what has been a steady grind lower from AUD against sterling in recent weeks, the rate dropped almost a cent on Thursday, as AUD found further strength off the back of China’s positive factory data with the rate reaching a low of 1.5481. Considering the rate reached a high of 1.5880 in early November, now is a great time for AUD sellers.
If you have a requirement to sell AUD, speak with your broker today on 01494 725353 to take advantage of the rate.