Posted by Allison on 18 August 2010, 09:31
It’s good to see you back and ready to read another fact loaded currency report. We are looking right now at the last couple of days of activity on August 16th and August 17th. You have to admit the currency markets (and other markets for that matter) are making for a wild investor ride full of mystery. Will the pound go up or will the pound go down?
If you want to see some interesting charting then look at the charts for the last couple of days. The pound rose against the US dollar, fell sharply on Tuesday against the euro after a small gain on Monday, formed an almost perfect pyramid against the New Zealand dollar and made a lopsided pyramid against the Australian dollar.
My-oh-my…what’s an investor to do? If it’s any consolation the equity markets have been giving their investors a wild ride too.
Let’s begin with the pound against the US dollar. The pound ended last week at 1.558573, and it seemed that it would continue to strengthen as the European economy as a whole grew stronger. So far so good by Monday evening as the pound strengthened to 1.561320 for a .176% increase.
The pound continued to rise on Tuesday but at a little over half the pace. It slipped to 1.562576 by Tuesday evening.
One of the fascinating charts for the week is the pound paired with the euro. The rates stayed almost even on Monday with the pound ending the day at 1.217878.
But hang on to your seat because the ride got wild as promised. The pound became one of the worst major currency performers when it slid against the euro on Tuesday to end the day at 1.215067.
Moving on to the New Zealand dollar, you will find the pound rising against the New Zealand dollar to 2.220801 which is over a 1% increase on Monday. But then what happens?
The pound fell by almost as much on Tuesday (2.201944) leaving the currency close to its starting point as of last Friday (2.198003). Not much progress to claim there. Chart the pound against the kiwi and you have yourself a picture of a perfectly shaped pyramid with the point formed by Tuesday night’s rates!
Now let’s take a peek at the pound and the Australian dollar. We find another pyramid though it’s a bit lopsided. Last time we looked at the pound on Friday evening, it was at 1.738919. It rose by a healthy .706% to 1.751187 by Monday evening.
But on Tuesday all the gains were lost as the pound swiftly dropped to 1.731592.
Looking at the Hong Kong dollar, the pound redeemed itself again by rising both Monday and Tuesday. From 12.112518 last Friday, the pound could claim 12.135185 by Monday night and then 12.140826 by Tuesday night.
Small gains maybe but at least the direction was up both days.
All in all it was quite a hectic two days for the pound.
The yen has been appreciating rapidly this year against the US dollar. It was somewhat of a relief then when the yen weakened the last two days against the US dollar to 85.53.
Mexico’s peso rose for four straight days in response to the good earnings reports coming out of the US. Makes you wonder because just last week the US companies issued disappointing earnings reports and the peso fell. So which is it? The peso ended Tuesday evening at .079256 pesos.
The pound certainly had some interesting activity the last two days. Of course there are still three days left in the week, and a lot can happen in three days. Check out this article on Bloomberg and see for yourself that some analysts see the pound’s gains against the US dollar as being a temporary state of affairs.
As for the US dollar...who knows? Until the economic news coming out of Europe and the US is more stable, the bottom line is anything goes.
We will return in a few days and see how the rest of the week went. It could be a long three days, don’t you think? Come back and find out for yourself.