Summary Of Currency Markets For October 12th – October 18th 2009

Posted by Allison on 19 October 2009, 17:08

It’s time to take another look at the currency markets once again, as a brand new week gets underway.  Last time we saw a mediocre performance once again from the British pound, with only two good results out of five.

The two good results were both marginal increases too, so there was no distinct good news to be found anywhere.  And there were some bad results as well, particularly against the New Zealand and Australian dollars.

So clearly if anyone is looking for a prolonged period of strong results from the British pound, they are going to have to wait for a while if they want it to happen.  The currency converter has been returning poor results for some time now, and while that might equate to good news for some, it certainly doesn’t appeal to a lot of people out there.

So what can we expect this week?  Will there be a consolidation of the good result we had against the US dollar last week, or will we lose the ground we gained once more?  And what about that half a cent loss against the Euro – will we manage to gain it back once again, or are there more losses waiting in the wings to fell us?

Speculation is one thing of course, and there has been much of that around lately.  People have been wondering how the currency markets will end the year, as we are now fast approaching the end of October, leaving just two months to go all in all.

Whatever happens on that note we have another week’s worth of data to share with you here, so let’s get started and see what actually happened last week.

An overview of the currency markets for October 5th – October 11th 2009

As we stated previously the US dollar slipped against the pound last time, giving us a slightly improved exchange rate of 1.5983 by the end of the day.  But which direction would the pound go in next?  Would it be able to increase the pressure against the dollar, or would the American currency be back in charge again by the time the week was out?

Let’s see what actually happened.  The week certainly didn’t get off to a great start because by the close of play on Monday evening the pound could only muster up an exchange rate of 1.5820.  So we had already lost out on over a cent and a half – providing us with just the kind of start to the week that we didn’t want.

So we now had to turn around a big deficit.  But at least we still had four days in which to try and make some kind of impression on the American currency. 

We were certainly going to leave things until the last minute though, because the second day brought an even lower exchange rate.  The final figure on Tuesday evening was 1.5799, meaning that we had lost nearly two cents in two days so far.  If we kept this up things did not bode well for the rest of the week.

But as it turned out the midweek point was rather telling.  It was almost as if the poor performance so far had actually jolted the British pound back into action.  Because by the end of Wednesday we were back looking at an exchange rate of 1.5996.  So we had added on nearly two cents overnight – putting back what we had lost in the previous two days, plus a bit more for good luck.

So far the week had been rather interesting and something of an eye opener.  But we still had two days to go and going on the results we had seen so far, anything could happen before we got to Friday night.

If we were slightly nervous that things could go back downhill again though we didn’t need to worry.  Thursday was clearly going to be the best day of the week so far, with a closing exchange rate as everyone headed home of 1.6250.  That gave us another great overnight increase, this time of around two and a half cents.

But there was still one day to go and all could still be lost in that final day.  We desperately needed a good week here for the pound, and although we had built up a bit of a cushion it could still be deflated in that final day if we weren’t careful.

Luckily that was not to be and we would – for once – get a happy ending to the week as a whole.  The final rate to make a note of was an impressive 1.6308 – meaning that we had managed to add on a total of 0.0325 all in all.  This was definitely a good week for the pound, if not such a good one for the US dollar.

So on that happy note let’s see whether the pound felt equally as able to take on the Euro.  We lost out on just over half a cent last time, and this currency is one that we really need to get a grip over.  The exchange rate we are starting with here is 1.0836, so let’s see what happened next.

As with the US dollar we didn’t make the best start, and by Monday night the exchange rate had slipped back to 1.0714.  So we were a cent down and looking to achieve even more as the week went on to make up for it.

There was another fall backwards on Tuesday as we dropped slightly further down to 1.0629.  But this was mirroring the result we had seen in the US, so perhaps it wasn’t quite time to panic yet.  Wednesday did indeed see a slight improvement to 1.0749, but it wasn’t quite enough to make us feel confident that we could achieve a big difference in the week as a whole.

Thursday certainly changed things though because by the end of the day the British pound was claiming 1.0932 against the European single currency.  This was a lot more positive than we had seen in a while, although with one more day still to go we couldn’t help but feel a little bit cautious still.  Bigger advantages have been lost in less time, so there was still a lot to think about.

Luckily for us we didn’t have to worry – not this week at least.  While we didn’t see another huge jump on Friday a small one was on the cards, leaving us on 1.0967 by the end of the day.  That equated to an overall increase of 0.0131 – but an increase it was, and still something very much to be celebrated.

So let’s move on now with two out of two good results under our belts so far.  Hong Kong is the next stop, with an exchange rate of 12.387 to start with this time around.  We did achieve a good result against the Hong Kong dollar last time, adding on a total of 0.104 all in all.  Could we do the same again this week?

We should be looking for the same pattern we have seen against the US dollar and the Euro again here too – a poor first couple of days followed by three much better ones near the end of the week.  And Monday certainly seemed to be following that same pattern again here.  It left us with 12.261 at the end of the day, losing out on 0.126 on that first day of trading.

So what could we do from that point onwards?  Well Tuesday didn’t bode much better, but once again perhaps this was simply the British pound getting into the swing of things.  Whatever the case may be, the end of the day saw the pound settling on 12.244.

Wednesday has been the turn around day so far for the other currencies, so we were hoping it would prove to be the same for the pound versus the Hong Kong dollar.  And it was – because by the time the markets closed for the day the UK pound was back up to 12.397 against the Hong Kong dollar.

Predictably we could expect two good days now if we are looking at how things had been going with the rest of the currency head to heads.  And we were right here as well.  Thursday saw a nice jump up to 12.593, which immediately put us significantly ahead of where we had ended up last time.  And it didn’t stop there either.  Another good result on Friday meant that we were finishing the week with a flourish on 12.638 – adding on a total of 0.251 all in all.

So that makes three out of three good results so far.  But now we come to New Zealand and Australia – countries where we have failed to make an impression for quite some time now.  Could this be the week that made a difference?

We ended up five cents down on the Kiwi dollar last time, leaving us on 2.1689 to start with this week.  And once again there was that predictable Monday night loss to look forward to, with a finishing rate of 2.1542 on the very first day.

But could we expect another loss on day two, as we had in every other country so far?  Indeed we could, and it seemed worse than ever in New Zealand, as we finished on 2.1383 at the end of the day.  But here was the turning point against the US dollar, the Euro and the Hong Kong dollar, so it may well be that the same was about to happen in New Zealand as well.

And it did.  On Wednesday the 14th the British pound leaped back up to 2.1727, swallowing up the losses of the previous two days and ending up further ahead than it had finished the previous week as well. 

But there was more good news in store.  Unbelievably the exchange rate just twenty four hours later was 2.1894, and as if that wasn’t enough the pound made a sprint for the finishing line on Friday evening too.  By the end of the week we were looking at an exchange rate of 2.2087 – which meant we had added on a total of very nearly four cents in a single week.  That had made back some of the huge losses we have coped with recently – but there was still more work to be done.

So it is four out of four so far.  Could we possibly turn it into the best week for the pound in a long time and achieve a better exchange rate against the Australian dollar as well?

A loss of seven cents the previous week had left us on 1.7649, so that was our starting point this time.  That first day dip was perhaps a little more pronounced here than it had been elsewhere, giving us an exchange rate of 1.7453 on day one.  Day two saw another dip adding up to nearly a cent, which gave the closing rate as 1.7369.

But Wednesday gave us that predictable rise we were now waiting for.  By the end of the day we were on 1.7550, and with two days to go this could indeed turn into a very good week for the pound.

Thursday saw the pound push higher still and finally take back some of the losses it had experienced recently.  The end of day figure there was 1.7726, and by Friday night that had edged up slightly higher to 1.7782.  So the final tally here was that the pound had added on 0.0133 overall – not a bad improvement all in all.

So it was certainly a week to celebrate – but was it the first week of several or just a one off?

Notable events in the world of currency

British pound has good week against the Canadian dollar as well

The British pound claimed 1.6337 on Monday night, but just four days later it was up to 1.6954.  Once again this was a great result for the beleaguered currency.

Canada has an up and down time with the US dollar

It stood at 0.9579 on Monday night and then 0.9719 on Wednesday night.  But by the time the week was out the Canadian dollar was back to 0.9618, gaining just a small amount overall against the US dollar.

Swiss franc climbs against the US dollar

The Swiss franc had a starting point of 0.9712 for last week, but a peak of 0.9822 on Thursday evening fell back to a still impressive 0.9795 the next day.

The Euro was hitting the headlines again this week as stories came to light about the problems that could be in store regarding the strength of this currency.  A typical news story took the same pattern as this one from the Bloomberg website.

So there we are for another week – and it was a very good week as far as the pound was concerned.  We’ll be watching closely to see if next week will be as promising as this one was.

 

Comment

  1. I love reading these reports each week but it is almost better going back over them again after a few more weeks have elapsed!

    Why? Because we get to see whether a good week really was the start of something better, or whether it was a one off. Of course that is half of the excitement when it comes to trading in currency, and that’s why I could never do it. I’d love to be able to but I much prefer reading about it without endangering my own cash!

    Do other people out there agree with me, or is it better investing in other currencies?

    — Ben · Nov 23, 06:47 PM · #

  2. I agree with you Ben in that hindsight makes these reports even better than they are when they first come online. I always look out for the new ones but whenever I read them I always find myself going back over old ones as well.

    And I’d prefer reading rather than investing as well. I think it’s just too dangerous trying to make money this way. You need to be confident about what you are doing and I am certainly not! I’ll stay on the safe side of things and see what other people do with their money instead I think.

    — Allison · Nov 25, 12:22 PM · #

  3. That comment about it being safer watching what other people do with their money does have a grain of truth in it. But as we all know, their actions can affect our lives as well.

    I wouldn’t like the idea of investing in various currencies, but probably mainly because I don’t know what I am doing. Maybe if I had the right amount of knowledge things would be different. But then maybe if I carried on reading this column every week I would have that knowledge! Ah well, maybe next year. Currency investing does seem rather exciting doesn’t it?

    — Kate · Dec 18, 04:33 PM · #

  4. These ‘notable events in the world of currency’ are good to read months after the fact as well as when they actually occur. It’s amazing how much things can change.

    I’ve often read about key events that happen and wonder how much we will care about them a year or so later. Did they really matter that much in the first place or are they part of a pattern that has a longer and bigger story to it?

    Try it – try thinking of these weekly reports from a different and longer perspective. You can get more out of them depending on when you read them.

    — CDixon · Dec 21, 12:13 PM · #