Posts Tagged ‘exchange’

Currency Update 15th February 2010

Posted by John at 15 February 2010

Category: Business, Money

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Here is this weeks update from currency expert  Keith Spitalnick.

Hola amigos!

Well what a week to have been part of the European dream!.

Even Freddie Kruger walking down Elm Street would have got a warmer reception than the way the Greeks have been treated. The ongoing saga reminds me of 2 things:

1) When all the weedy kids in school ganged up on the really weedy kid…

2) When I use to cry and my mother promised to give me a smack so I had something to really cry about…

The 16 euro zone members who for the past 10 years have built the European dream on low productivity and high debt and appalling fiscal management have decided they have had enough and the Greeks are squarely to blame. On the face of it, yes the Greeks have completely mishandled their own affairs with a tax collection rate of only 30%, but they have done this under the eyes of their 15 European neighbours and they are not alone and will certainly not be the last to have their fiscal affairs laid out in full view of a global audience.

So what to do?

Well, as ever, the remaining Europeans will try to ignore the problem and hope it goes away. It won’t though. What is needed is for savage cuts in the Greek economy and…wait for it…..this bit you’re going to love:

Last Monday 70% of the Greek population backed the tough measures needed, on Thursday the other 30% went on strike, you couldn’t make it up… well, you could …. It’s known as the European dream.

The answer: Greece will not be allowed to go to the wall, the Euro will survive, you will see a large dose of European fudge, a bit of rule re-writing and then the finger pointed at someone else to blame for all their problems. Ironically what the euro zone needs is a much weaker currency and the Euro has only dropped a few cents on the back of these supposed apocalyptic events.

Deep budget cuts and a huge increase in productivity is also required…we wont get it.

Pass me the Ouzo……

For more information on currency exchange you can click here.

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Currency Update 8th February 2010

Posted by John at 8 February 2010

Category: Business, Money

Tags: , , , ,

Is it really smooth sailing?

This weeks update from currency expert Keith Spitalnick.

The UK economy has officially emerged from a deep recession, but is it really smooth sailing ahead now?  Mervyn King has indicated that he expects inflation to move above the 3% level, but that it will cool later on in the year.  Arguably the big question for this year is how quickly to withdraw the monetary and fiscal stimulus. Remove QE too early and we run the risk of a double dip recession however if QE is withdrawn too slowly then forecasts and assessments of our economic health become distorted as the economy relies on an artificial stimulus rather than institutional capital reserves.

The capital injected in the markets over the last 18 months was designed to free up lending, but even now the effects of more liquidity have not necessary permeated down to the high street.  Banks are now required to hold greater levels of capital, and move away from their preference for high risk high return trades.  These new regulatory requirements in the financial sector are reflected in the break down of our GDP figures and explain why Britain has only limped into the black this quarter.

Mervyn King is keeping a tight reign on the value of sterling, and the MPC’s increasingly ‘dovish’ perspective regarding inflation is the controlling factor for the pound over the next year.  Although the BoE realize that inflation is bad for our economy they would sooner keep the pound weak with interest rates low so as to nurture a stronger recovery.  The promise of obvious growth in the GDP figures released in January saw the pound rally to a 5 month high against the euro, and coupled with fears over the stability of the Portuguese, Irish, Greek and Spanish economies the pound has held form above 1.1350 for those tentative investors keen to get a quick return from the British market.

Some analysts have suggested that the only way the UK is to avoid a Greek or Spanish style economic crisis would be to increase income tax by 10%, VAT to 20% and the privatisation of the health service. Although there is always a threat of the double dip, it must be remembered that Greece and Spain had issues because of their ability to finance their debt. As the head of sovereign risk strategy at HSBC pointed out the cost of insuring a British government bond (gilt) means that there is ‘zero percent’ chance of Britain defaulting on her loans. Credit may be slow moving domestically, but internationally our debt is still an appealing investment.

Arguably the most important dates over the next two months will be 10th February and 15th March when we have the Treasury’s Inflation Report Hearings. During these hearings the BOE Governor and several MPC members testify on inflation and the economic outlook before Parliament’s Treasury Committee. If the comments are more ‘hawkish’ than expected we would expect a positive improvement in the value of sterling.

For more information on currency exchange you can click here.

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This Weeks Currency Update

Posted by John at 27 January 2010

Category: Money

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Here is this weeks currency update from Keith Spitalnick.

Hola amigos!

The week began with significant gains for sterling against the euro on the back of last weeks push beyond the key 1.13 level.

Tuesday saw the release of the previous month’s consumer and retail price indexes. The data, which exceeded forecasts by 0.3% on both surveys, indicates prices increased for December. This in itself was not unexpected, but it does put pressure on the Bank of England to address the specter of inflation rising whilst interest rates remain at a record low.

The Bank of England Monetary Policy Committee Minutes showed a 9-0 vote in favour of an unchanged monetary policy in respect of both bank rate and quantitative easing. The tone of the MPC Minutes was fractionally more positive than in the previous month. Reference was made to the upturn in the global economy, largely Asian driven, although there was evidence of stronger US growth in the fourth quarter. Yesterday also saw publication of the Bank of England monthly Agents survey which places more emphasis on anecdotal evidence, including feedback from business executives. The Agents Summary of Business Conditions made reference to a very gradual improvement in business sentiment, in part due to a recovery in export demand. If this scenario is sustained, this would be positive for sterling.

January is traditionally a period of heightened activity in the insurance, re-insurance and fixed income sectors. Internationally this activity incentivizes traders holding strong currencies to capitalize on the arbitrage potential in other markets and traditionally London benefits as the largest trader in bonds and exchange traded derivatives.

Analysts assert that any reduction in the unemployment rate in 2010 is likely to be very gradual, but in December Jobless Claims (Unemployment Change), although generally viewed as a lagging indicator, returned far better figures than expected with claims down by 15,200; also the Unemployment Rate, a figure that relates to November, dropped back to 7.8%. The number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor conditions, which puts a lot of focus on the retails sales figures over the Christmas period, and serves to reiterate the significance of the Bank of England’s role as the manager of inflation. This week has ended with the release of December’s retail figures. Fortunately they were better than the month previously, however not as good as forecast which prompted a slight drop off in sterling to a low of 1.1442 for the morning’s trading.

Despite these numbers, no rate hike is in the horizon. Mervyn King made a public appearance on Wednesday and cooled down such expectations. He said inflation could go above 3% but the likelihood is that it will cool later in the year, and preferred to focus on the problems of the economy, especially on the big government deficit.

Wednesday and Thursday of next week promise to deliver a mixed bag by way of information. There will be minor economic statements coming through from the Eurozone, mostly focusing on French and German spending and consumer and business sentiment, but these are unlikely to prompt any decisive change between sterling to euro. The 26th will see the release of the first HPI figures of the year, relative to December’s homes sales activity. Consumer sentiment in the UK has taken a bit of a knock already this year and many property agents are reporting greater interest, but less stock available.

The significant economic data released next week is the preliminary GDP figures. There are 3 versions of GDP, released a month apart – Preliminary, Revised, and Final. The Preliminary release is the earliest and thus tends to have the most impact and given that these figures chart the change in the inflation-adjusted value of all goods and services produced by our economy they will allow us to asses not only the accuracy of the governments figures for last year, but also the threat of inflation rising above the current 2.9% level. A GDP figure higher than forecast is usually sterling positive, so we could see the 1.15 level tested, but we do need a drive to 1.155 for the markets to stabilize around this support level.

Hasta la proxima!

For more information on currency exchange you can click here.

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Euro Struggles As GB Pound Strengthens

Posted by John at 20 January 2010

Category: Business, General, Money

Tags: , , , ,

Good week for the GB pound

This weeks look at the state of money from currency expert Keith Spitalnick. A very good week for sterling last week as it pushed beyond the key 1.13 level against the euro and also gained against the USD. The push on sterling was largely attributed to improved economic data leaning to a more positive outlook for the UK economy. In addition the National Institute of Economic and Social Research (NIESR) estimated that UK fourth quarter GDP which is due out next week will come in at +0.3%- so therefore the UK will be out of recession! The upbeat assessment was mirrored by MPC member Andrew Sentence who commented that the Bank of England may need to raise interest rates this year.

Will GB pound continue to grow?

So will this good run continue this week? Hopefully so. We have a plethora of economic data and feedback this week from the UK economy which could galvanize sterling further. We start on Tuesday with the Consumer and Retail price index which is a gauge on inflation for the UK- the expectation is that the measures will show an increase in inflationary pressure which will add further to the probability of a rate rise in 2010. Following this we have the Bank of England minutes which may offer an insight into the cessation of the Quantitative Easing programme- possibly as early as February. Following this we have retail sales and jobless data followed by public finance data. So a big week for the pound and if we get more positives than negatives we could see a stronger pound ahead of the official release of Q4 2009 GDP next week.

Euro still fighting

For the Eurozone we are again focused upon Greece. Greek officials are summoned to Brussels to face a grilling over “unreliable data” which hid the real story behind the health of the Greek economy. This again could lead to a weaker euro, last week German Chancellor Merkel stated that the Greek problem is adding great pressure to the Eurozone. The key market level will be to hold above 1.13 and then push back to 1.15 to show a clear break from the current trading range of 1.10-1.13.

For more information on currency exchange you can click here.

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