Summary Of Currency Markets For October 5th – October 11th 2009

Posted by Allison on 13 October 2009, 12:04

So here we are again with another week’s worth of currency market data to look through.  We have seen some disappointing results in recent weeks as far as the British pound is concerned; it has dipped below previous levels against the five other major currencies we always look at as part of this regular report.

Last week the losses were not as bad as they have been in other weeks, but there were still losses there to be evaluated.  The pound lost just over a cent against the US dollar, while it managed to add on a miniscule amount against the Euro.  We lost a small amount against the Hong Kong dollar as well, while losses were also sustained against both the New Zealand and Australian dollars.  The good news there – if such a phrase could be used – was that the losses were significantly smaller than the ones we have seen in the recent past.

So was this a turning point of sorts?  Did it point to what could be a better week this time around?  Would we actually end up with a stronger pound in the very near future?  Perhaps it will be a little too much to hope for that we can report on five excellent results for the pound in this very report, but we may find we have a bit better news.  Either that or the slowing down of the rot from last week has lulled us into a false sense of security that will stick with us for a while.

Let’s get started then and see what happened during the last five days of trading on the currency markets.

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

So let’s begin as we always do by looking at how the British pound coped against the US dollar last week.  We were starting with an exchange rate of 1.5849, but how did the figures on the currency converter vary after that?

Well we did start off in the right direction, and in fact Monday turned out to give us a good result.  By the time the markets closed that evening, the British pound had managed to improve its standing to 1.5937.  So already we were nearly a whole cent up on where we had finished the week before – which had been a week that saw a loss of just over a cent.  It was a promising start.

But where would we go from there?

Tuesday’s lesson was that we shouldn’t assume one good day will lead to another.  By the end of it we were slightly lower than we’d been the day before, bagging an exchange rate of 1.5897.

And once again the change was minimal on Wednesday, but it still went in the wrong direction as far as we were concerned.  By the close of play the British pound was claiming 1.5887 US dollars.

So with two days to go would we see a decline in the exchange rate for the whole of the rest of the week?  Or was there better news in store?  We were eager to see the British pound do better against the US dollar, after a spate of exchange rates that definitely hadn’t been on our side.  So could we manage to do just that for the remainder of the week?

As it turned out the answer was the better one of the two.  We did indeed manage to up the ante a bit, and by the time everyone headed home after a brisk day’s trading on Thursday, the British pound had broken back through the 1.60 barrier.  The final exchange rate for that day was 1.6046.

But how would things end for the week as a whole?  Would we be able to stay over that level?

Well we finished on a better note than we had started, but we didn’t quite manage to stay above that 1.60 level.  By the end of the day we had slipped slightly to 1.5983.  But that still meant we had added on just over a cent since last week – giving us the first increase over the US dollar for a while now.

With that good result under our belt, let’s move on to see whether we could achieve something similar with the Euro.  We had added on a miniscule 0.0018 last time, leaving us on 1.0902 at the end of the week.  And as the new week kicked off, we saw very little change against the Euro to begin with – although what little there was did go in the right direction.  We finished up on 1.0903 by the end of that first day.

But how did things develop from there?  Well unfortunately that marginal increase on the first day led to a more significant loss on the second.  The figure at the close of play on Tuesday was 1.0798.

So we were already having a bad time against the Euro.  A weaker pound might be of advantage to some quarters, but we’ve seen too much of a weak pound of late.

We managed to show a little more strength on Wednesday, and succeeded in achieving an exchange rate of 1.0811 against the Euro.  But already it seemed as if the starting point of 1.0902 was long forgotten, and it would be difficult to re-attain it.  The danger with the Euro is the ever present threat of parity, where the two currencies are worth pretty much the same.  This never used to be much of a problem, but at present it is something that always seems to be hovering in the background.

We still have two days to go however, so perhaps we could try and attain a better exchange rate before the week as a whole came to a close.  Thursday at least did see a better improvement in the exchange rate, as the pound managed to up the ante and close out the day on 1.0869 against the Euro.  But with one day left to go, could we at least retain the level that we had started the week with?

Unfortunately the answer did no go in our favour.  As Friday came to an end and everyone went into the weekend, we finished up on 1.0836.  This was a full 0.0066 lower than we had kicked off the week, but at least it wasn’t as bad as it could have been.

So with one good result so far and one bad one, let’s move over to the Hong Kong dollar.  The final exchange rate last time was 12.283, after having lost 0.092 over that whole week.  Could we improve on that in any way this time?

The first day certainly went well, with the British pound claiming a total of 12.351 Hong Kong dollars by the time trading finished.  Was this the start to a memorable week against this particular dollar – and if so, would it go in our favour?

Tuesday showed us though that it never pays to get overly excited too early in the week.  By the close of play on that day we had dropped down slightly to 12.321.  This was only a relatively small loss, but it did make us wonder where the rest of the week would take us.

And there was another leak on Wednesday as well, as the power of the pound leaked away and left the onus on the Hong Kong dollar once more.  We had finished up with an exchange rate of 12.312 by the end of the day, but with two days still to go there was still time to make sure there was some improvement.

Thursday was better in terms of results for the pound, as we managed to push the exchange rate up to 12.436.  That equated to an increase of 0.124 overnight, and with just one day to go it gave us hope that perhaps the pound could indeed succeed in bagging just the kind of strong exchange rate it was after.

But there was another dip in store for Friday.  When all was said and done the final exchange rate for the week was 12.387.  But even though the week as a whole didn’t seem too promising, we did actually manage to come out on top overall.  The British pound finished the week up by 0.104 against the Hong Kong dollar.  So there was definitely a result to celebrate there.

Onto New Zealand now, where we lost out on just under a cent last time, leaving us on a starting point of 2.2195 this time around.  What could we do this week?

We’ve not had a good time against the New Zealand dollar recently, and it soon became clear that it wasn’t going to be a lot different this week either.  By the close of play on Monday we were looking at an exchange rate of 2.2085, and Tuesday had some even worse news in store.  We experienced a drop of nearly four and a half cents overnight, leaving us struggling home with an exchange rate of 2.1637 by the end of Tuesday.

So could we hope for anything much to happen on a positive note for the remainder of the week?  As it turned out things did improve, but only marginally and nowhere near enough to make a big difference to the overall state of play.

Wednesday’s closing exchange rate was slightly better at 2.1650, and there was a similar story the following day.  By the end of Thursday we were looking at a figure of 2.1689.

But while Friday had another improvement in store, you would have to go to another decimal point or two to notice it.  We went from 2.168913 on Thursday to 2.168933 on Friday – just a fraction of a percentage different.

So with a loss of over five cents against the Kiwi dollar, what could we do on our last stop for the week against the Aussie dollar?  We were starting from a rate of 1.8358 after losing nearly a cent overall last time.  Could we put that back on again?

Once again we saw a disappointing start as the British pound fell to 1.8223 on Monday night.  But there was worse to come the following day as the Aussie dollar took control and forced the pound back down to 1.7897.  Was this how the rest of the week would pan out as well?

The rot did at least seem to be slowing down on Wednesday, as the pound finished on 1.7852.  Could we stop it altogether and reverse the process to do rather better for the remaining two days of the week though?

This was perhaps predictable, but the answer was no.  By Thursday evening the rate was down further to 1.7767, and by Friday night the pound could only manage to successfully a rate of 1.7649.  So once again we were looking at a loss here – this time to the tune of a whopping seven plus cents.

So needless to say this wasn’t the best week for the British pound.  After what looked to be a promising start after an increase against the US dollar, things didn’t pick up at all.

Notable events in the world of currency

Aussie dollar takes charge against the US dollar

On Monday evening it was claiming 0.8745 US dollars, but the Aussie dollar really had a good week in store.  By Friday night that figure had climbed to an impressive 0.9055 – giving it a real week to remember.

Swiss franc has a rocky week against the US dollar

The chart plotting out the exchange rate between these two currencies looked like the ocean in the middle of a force nine gale.  But by Friday evening the Swiss franc had managed to get the upper hand overall.  Monday evening had a rate of 0.9678, but four days later that had changed to 0.9712.

Euro dips against the Japanese yen before regaining its balance

The Euro was holding an exchange rate of 131.41 against the yen on Monday evening.  But after dipping to a low of 130.46 on Thursday evening, it regained a rate of 131.12 by the close of the week.

We also saw this week how comments from someone in high places can influence the currency markets.  Read this report from Reuters to see how Ben Bernanke, the chairman of the Federal Reserve, had an impact on the US dollar.

So we come to the end of another weekly report, and this time we are hoping that the rot experienced by the British pound recently will soon come to an end.  The only question is when that end will come to be.  We’ll see you next time.

 

Comment

  1. I know this has been another dreadful week for the pound, but at least we did okay against the US dollar. I’ve read a few reports in recent days that reckon the US dollar is doing poorly as well. Maybe in relation to the British pound it isn’t doing so badly, but a lot of other currencies are taking advantage of it I think.

    I think we could see this pattern happen again next week too. A rise against the dollar and a fall against everything else. What do others think? Am I right or wrong? I’d bet I’m right.

    — Ben · Oct 14, 09:17 PM · #

  2. I agree with Ben. I think the US dollar has been performing worse of late. But there doesn’t seem to be a lot of big news stories about it. It’s almost as if the weaker performance is going under the radar for some reason.

    The British pound has seen better days and it always seems as if the pound is the one gaining all the headlines. But it certainly isn’t the only one to be in trouble. I think we’d do well to remember that. Maybe we should turn our attentions to what is going on elsewhere too?

    — CDixon · Nov 23, 06:34 PM · #