Summary Of Currency Markets For November 10th – November 16th
Posted by Allison on 24 March 2009, 10:03
So here we are again with our weekly round up of the currency news that has been happening all round the world. We always look at the major currencies and exchange rates, and if you have been keeping an ear to the ground regarding these, you will certainly have an idea about what we have to tell you.
Last week was possibly one of the biggest weeks that we have seen for some time. You might think that is something of a bold statement given that we are in dramatic times. You can check your currency converter one day and literally have no idea of whether the figure will be dramatically different the next day or not. There is a real uncertainty in the air with many currencies – and the British pound in particular is definitely having a rough time of it at the moment.
The previous week wasn't exactly a good one for the pound, but we had a feeling even then that we hadn't seen the last of the bad news. So let's move on right now and start our journey towards America, where the first piece of dramatic news awaits us.
An overview of the currency markets for November 10th – November 16th
The previous week we saw a dip in the exchange rate between the British pound and the US dollar, as we lost just over four cents across the week as a whole. That left us with an exchange rate of 1.5778 at the close of trading on Friday night, but how would we get started when trading began again on Monday morning?
Well there was actually very little movement on that day, with the British pound finishing ever so slightly up by bagging an exchange rate of 1.5788 with the dollar by the end of the day. That seems to be the limit of any gains we make at the moment – they are all very small ones.
The next day we saw a slight drop in the exchange rate, as we finished at 1.5646 by the close of play. Not such a small drop, but still significant in the scheme of things, and as it turned out it was going to herald a big change that a lot of people would remember for some time to come.
Remember a few months back we mentioned that some people were predicting the pound could go as low as $1.50 against the dollar? That seemed unthinkable at the time, mostly because we were near the two dollar mark. But it might just be worthwhile keeping that little prediction in mind during the next couple of minutes.
So on Wednesday the real fall began. From 1.5646 the day before, the pound was at 1.5222 by the end of the day. We were creeping ever closer to that $1.50 barrier that so many experts had predicted we would reach just a few short months ago. But would we actually reach it? It still seemed unthinkable.
And if we thought we could end up with a tantalising battle to stay above that level for some time to come, we were disappointed. It was almost as if the pound had got so close to it that it gave up the ghost without a fight. That was because just twenty four hours later, we were looking at an exchange rate of just 1.4836. The pound that had got you two dollars a few months previously was now worth less than $1.50.
And if you had hoped for better news to close out the week with, you didn't get it. The pound fell to 1.4741 by the close of play on Friday, leaving us nursing a loss of over ten cents in a single week, and also a plummet through that barrier.
Some have predicted that it could go even lower and not stop until it gets near the $1.25 mark. Just a short while ago we would have said that was impossible… but now we are not so sure. All we can do is wait and see, and perhaps postpone that holiday to America that we might have had planned.
From America let's move on to Europe, to see if there is any better news awaiting us there. We lost nearly three and a half Euros last week against that currency, but given the performance we put in against the American dollar it seemed foolhardy to assume that we were going to achieve anything much against the Euro.
1.2369 was the exchange rate we finished with the previous Friday, and on Monday the slide had begun as we dropped back to 1.2247. Was this going to be the start of a similar fall against the Euro as we had already seen against the dollar?
Tuesday actually saw the exchange rate go in our favour – albeit only by a tiny amount, as the closing figure for the day was 1.2274. Wednesday was the day that marked the start of more falls for the pound though. By the close of play on that day we had fallen back to 1.2149. It seemed as if a similar situation to the one that had occurred in America may play itself out here.
And in fact that was what happened. Twenty four hours later the exchange rate had fallen still further to 1.1845, prompting thoughts that the rate could fall even further by the end of the week. This was clearly not a good week for the pound, which doesn't seem to have any strength at all at the moment.
And by the end of the week, as everything stopped for the weekend, the pound could only claim 1.1630 Euros in the exchange rate. That represents a loss of 0.0739 over the course of the week – another big drop and another worry for the pound.
So with that sobering news under our belts, did we manage to do any better in Hong Kong last week?
The previous week saw a closing exchange rate of 12.228 and a loss of 0.337 over that week as a whole. That wasn't exactly a great performance and given the poor showing against the US dollar and the Euro last week, could we honestly expect a good performance now?
Monday saw a slight improvement against the Hong Kong dollar, as we finished on 12.236 for the day. But somehow that wasn't enough to provide us with any kind of reassurance.
And of course the next day the swing went back in favour of the Hong Kong dollar again, as the closing exchange rate was set at 12.125. It seemed like we were almost inevitably starting that slide again, and that wasn't good news.
Wednesday brought a bigger fall to 11.799, making this the day that big falls were seen against many different currencies. The pound certainly doesn't have much in the way of strength at the moment, and we can see this as we look at the remaining exchange rate figures for the rest of the week.
Thursday saw another drop, this time ending on 11.498 for the day. That leaves one day remaining for the week's trading, and no one was really expecting the pound to finish strongly in any shape or form. And that was certainly what happened, as it managed to fall further to end on 11.425 for the week. In total that means the pound lost 0.803 over a single week.
Will it fall still further next week? Or can it hang on and show some of the strength it so desperately needs? We will soon find out.
Our next stop is in New Zealand, where we quite often do rather well against their dollar. But given the performance we have had so far this week, we cannot assume anything good will happen now – and it may be that the New Zealand dollar will prove to have a lot more strength than the British pound at the moment. Let's find out.
Last time we ended with an exchange rate of 2.6856, after a week of highs and lows that were very extreme. What was in store this time round?
Well, from the way things started it looked as if we were going to see more extreme action this time as well. By the close of play on Monday, the exchange rate stood at 2.6246. That is a drop of over six cents in just one day's worth of trading.
But in the past we have seen very big highs and lows in the exchange rate between the British pound and the New Zealand dollar, and even when we have lost ground like this in a single day, we end up gaining a lot back very soon afterwards… or vice versa.
So what happened this time? Well, by the end of Tuesday the British pound had finally shown some strength and climbed back up to 2.6804. Unfortunately for us that didn't last long and the New Zealand dollar fought back hard the following day, leaving us with an exchange rate of 2.6486. What on earth was going to happen in the second half of the month?
On Thursday the swing went back in our direction again. As everyone went home after another vigorous day's trading, the exchange rate stood at 2.6670. So who would get the final bite of the cherry as we went into the weekend? Could the pound put in a final spurt of energy – or would the dollar win the day?
Perhaps we should have expected it given the performance the pound has put in elsewhere this week, but we finished on 2.6450 by the close of play on Friday. That represents a loss of 0.0406 in total since the previous week – just another loss to add to the basket.
So finally this week we end our journey as usual in Australia. Last time we lost eight cents here, so we were looking for a better performance this week (if even a little in vain). We'd lost around eight cents the week before too, so there was small wonder we were somewhat desperate.
If nothing else it was an interesting week here. We started on 2.3620, and by the end of Monday that had changed to 2.2830. A familiar drop in place to start with, then.
Things were better the following day though, as we finished on 2.3355. That was an impressive overnight comeback, although as usual we couldn't assume it would stick.
And indeed it didn't, as we closed on 2.3073 on Wednesday. So what direction would the rest of the week go in? Would we be able to climb back up to any extent, or would we see a fall that we wouldn't be able to stop?
Thursday did see some upward movement for the pound, as we managed to claim 2.3212 against the dollar by the close of play. But that was setting us up for a bigger fall, because when trading finished on Friday the exchange rate had plummeted to 2.2448. That makes a difference overall of nearly twelve cents in a week – even worse than the performance we put in over the previous two weeks.
Dare we even guess what may be in store in the forthcoming week?
Notable events in the world of currency
Eurozone finally falls into recession
It's official – or at least it was on Friday 14th. This had an effect on the power of the Euro, since several other currencies were able to get better exchange rates against the currency as the zone which uses it went into recession on an official basis.
US dollar plummets
That isn't a phrase we see too often, but it certainly was relevant against the Japanese yen last week. From a starting point of 99.208 on the 10th, it had fallen to 96.386 by the end of Friday.
So it certainly proves that even the US dollar can have a bad time of it against some currencies – even if not the British one.
US dollar vs Euro
This is often an interesting tussle, but the dollar actually came out worse on Monday 10th.
It did climb slightly midweek though, before dropping back once more. It seems as if the Euro has got what it takes to challenge the US dollar at the moment.
It's always good to keep up to date with what's going on with the exchange rates, and the BBC website has a very good section that helps you do just that. If you visit the Market data section of the News website, at http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/currency/default.stm, you'll get the latest data.
So we'll be back again next week to give you a low down on what will happen to the pound. Up or down? Higher or lower? We'll find out soon enough. See you then.