Summary Of Currency Markets For June 29th – July 5th 2009

Posted by Allison on 7 July 2009, 15:12

Welcome back to another look at what has been going on in the world’s currency markets.  Last time we saw some average results if you had been tapping away on your currency converter to find out how the British pound had been doing against the other major currencies.

We’ve had a few good weeks recently as far as the exchange rates against these currencies were concerned, but that didn’t extend as far as last week.  It wasn’t all bad, because we did manage to bag three nice results, but they weren’t huge improvements and we still lost ground on two other currencies.  But the fact that things went on a bit of a downward spiral for the pound made us wonder whether it was just a blip, or something more.

Perhaps the good results we had seen up until that point had now come to an end.  Maybe the pound wasn’t out of the woods yet, and it would be time now to see a difference as those good results gave way to bad ones.  Was it the start of a prolonged slide once more for the pound, or were there other events in store?

We could be looking too much on the bad side here, because many of the results we got last week were small ones.  We lost less than a cent here, and added on a fraction of a cent there.  It could have been no more than the ebb and flow you naturally get with the exchange rates and it may have been the kind of results that always come over time.

But we shall get our answers now as we take a look at how the British pound did against those main five currencies elsewhere in the world last week.  Are you ready?

An overview of the currency markets for June 29th – July 5th 2009

We had a nice round figure to end on last time when we looked at the performance of the pound against the US dollar - 1.6500 to be exact.  And it was a good result here too, as we had managed to up the exchange rate by around half a cent.  So did we have enough in the tank to do the same again this week?

Let’s find out.  The week was certainly destined to start well, as by the end of Monday the exchange rate had pushed up to 1.6565.  That gave us a nice improvement to talk about, and something to build on for the rest of the week.  But there were still four long days of trading to come, so we would need to carry on doing as well as we had on that first day.

Tuesday added to the gains we had made the previous day, but those gains were less than they had been to start with.  By the time everyone headed home for the day, the pound was left standing at 1.6587 against the US dollar.  Was this the sign of things to come and a resurgence by the dollar, or just a slowing down of how things were for the time being?

Unfortunately the former seemed to be true, at least for a while.  By the close of play on Wednesday, marking the midweek point, the pound had slipped back and lost some of the ground it had made up so far that week.  The final exchange rate that day was 1.6463.  Not much of a difference really, but as it turned out it did mark a turning point that week.

Thursday dawned and the markets got back in play once again.  What did they have in store for us this time?  Could we manage to do better and regain some of the small loss of the day before, or would that mark the start of a slide downwards that would be the telltale turning point of the week?

Unfortunately the latter would seem to be true by the time the markets closed for the day, leaving just one more day for the rest of the week.  As Thursday’s closing figure became known, we could see that we had lost ground once more – this time going down to 1.6387.  This was a much more noticeable change from the previous day, and it made us wonder what could happen in the one remaining day of the week.

And as it turned out, the way the week ended did not go in favour of the British pound.  It was almost as if that first small loss for the week had set us on a pattern that could not be altered.  And as a result, as the markets finished up for the week, we finished up on 1.6360.  That meant the week as a whole had seen a loss for the pound of almost a cent and a half.  It could have been worse, but seeing as we were looking for a good result it didn’t seem that good at all.

Let’s move swiftly on to the Euro now, which had got the better of the pound by nearly a cent last time around.  Could the pound regain any of that this week?

We were starting from 1.1705, and we had a good start on Monday as the end of the day figure took us back up to 1.1783.  But we had already seen a similar result happen in the US against the dollar, so perhaps it was a little early to be celebrating just yet.  Were we in store for an eventual loss against the Euro as well?  Let’s hope not – but we still have four whole days to look at before we know the answer.

And we did in fact drop back a little the following day, although the loss was only quite marginal in nature.  By the close of play on Tuesday, we ended up on 1.1735, losing around half a cent since the day before.  The real question was whether that would prove to be the turning point for the rest of the week.

As it happened the following day didn’t give us much to cheer about either.  The pound slipped back once more and landed on an exchange rate of 1.1679, dipping below the 1.17 mark and making us wonder whether it would get back above it for the remainder of the week.

There were still two days to go of course, so there was plenty of time yet to make up the ground we had lost over the start of the week.  The crucial problem was that a similar pattern had occurred against the US dollar, and that meant we didn’t exactly have a good example to go by.

There was another loss to come on Thursday, but thankfully it was a small one.  By the time the markets closed, leaving just one more day for the week to go, we were on 1.1664.  That was a difference of just 0.0015 in one day.  What we needed now was to be able to add back on something for the remainder of the week.  Could we do it?

Unfortunately the answer was not a good one.  As the markets closed for the last time that week, the final exchange rate we were left with was 1.1678.  We had added something back on, but it wasn’t enough to wipe out the losses we had experienced all in all.  At least the losses were quite small in the end though, with just 0.0027 lost over the week as a whole.

Next up it is the turn of the Hong Kong dollar, which came off slightly the worse for wear against the pound last week.  The final figure was 12.787, giving us an increase over the week before of 0.042.  Could we build on that this time around?

Once again the week did get off to a great start, as the pound pushed the Hong Kong dollar and ended up on 12.837 at the end of the day.  Not much difference, but enough to make us wonder if this was going to be a good week.

We managed to add on another small amount the next day, as the pound pushed the Hong Kong dollar even harder and finished up on 12.855 by the close of play.  Could we keep this up, or was this going to be the turning point – as it had been against the other currencies?

Well clearly the second half of the week was not good at all for the British pound.  After a reasonable start the final figure for Wednesday was 12.759, and there was more to come from that point of view before the week was out as well.

Thursday didn’t replace any losses and in fact it added some – by the time the trading on that day had come to a close the exchange rate had dropped further to 12.700.  These might not be big losses – for which we should be grateful – but they don’t make you feel confident either.  And the last day of the week led to another loss as well – and before we knew it we were down to 12.679.  That gave us an overall loss of 0.108 – and also something to think about for next time.

Onward now to New Zealand though, to see if we could do any better here.  There is something about New Zealand and indeed Australia too that makes them rather different from the rest of the currencies we look at.  We can sometimes get very different results here to the ones we get elsewhere – so does that mean we have a shot at improving the exchange rates against these two countries?

Let’s hope so.  We didn’t do well against the Kiwis last time around, losing under a cent and leaving ourselves standing at 2.5512.  What could we do now?

Once again Monday brought a good start to the week, with 2.5538 the closing figure.  Was this a good or a bad sign?  We’ve seen good starts elsewhere – the question now was whether we could keep it up.

And to that end Tuesday brought perhaps a predictable loss - with the pound falling back to 2.5414.  Was this the start of that familiar slippery slope?

We said before that New Zealand can offer different results to the rest, and that did seem to happen here – because on Wednesday at the close of play we were staring at an exchange rate of 2.5714 – an even three cents higher than the day before.  Now that was a great jump ahead, but could we hang onto it?

The answer was ‘yes we could’, as we bagged another increase on Thursday that left the pound standing at 2.5857.  But with one day still to go, you got the feeling that there was still all to play for. 

We did well though, because although there was a slight drop from our point of view, it wasn’t enough to rattle the pound.  We finished on 2.5832 for the week, meaning that we had managed to come out on top here – with an increase of over three cents all in all.

Finally we move on to Australia, which very often can mirror the results of New Zealand.  Were we in store for a good result here too then? 

We finished on 2.0434 last time so we were looking to improve on that.  Monday started well with a final rate for the day of 2.0563.  It was too early to suppose that we had a chance of doing well though, so it was time to just look at what else we could offer.

And indeed the following day was a disappointment as we dropped back to 2.0372.  We regrouped on Wednesday and boosted ourselves back up to 2.0421 to give ourselves the chance of doing better later in the week.  But would that be the way it played out in reality?

We managed a slight improvement on Thursday to 2.0442, and once again on Friday the improvement was small – leaving us on 2.0498 at the end of the week.  That meant we had increased our standing only marginally by 0.0064 overall.

So it was not a good week in particular, although the result against New Zealand was clearly the high point.

Notable events in the world of currency

New Zealand drops against Australia

Pitting these two dollars together led to an interesting result – the New Zealand dollar came off worst during the week.  From 0.8051 on Monday it dropped back to 0.7935 on Friday.

Euro does well against Aussie dollar

It was clearly not a good week all round for the Aussie dollar as there was a good result for the Euro too.

A rate of 1.7451 on Monday changed to 1.7552 on Friday.

US dollar improves against the Euro

After a closing rate of 0.7113 on Monday, the US dollar dropped against the Euro before pulling back and finishing on a better rate of 0.7138 on Friday.

On the day of writing this report, there was an interesting news story on the Bloomberg website that pointed to a good performance from the Japanese yen.  The yen is seen as something of a safe haven for investors at the moment, and some believe the signs of recovery we have seen are too early to be proper shoots of recovery.  You can read the story here.

So there we are for another week.  Not a great one for the British pound by any stretch, but it seems that the recession is far from over and perhaps we should expect some bad results like this.

We’ll be back next week to see if things are getting better or worse…  See you then.

 

Comment

  1. We’re halfway through the year now and we don’t seem to have made a lot of headway against the major currencies, do we?

    I was hoping a few months back that things would improve so I would have the hope of a foreign holiday this year. Not too sure now though – maybe I should hang on and go next year instead?

    It makes me wonder how things will be in twelve months from now though. Will the pound be better off, or will we still be floundering while other currencies find the strength to carry on? It’s really depressing me!

    — Ben · Jul 21, 10:27 PM · #