Tag Archives: US Dollar

US Election Day

The USD remains supported as the US go to the polls today to elect the 45th President as Hillary Clinton holds a narrow lead in the opinion polls. It is the general consensus that a Clinton win would provide continuity in fiscal and monetary policies and therefore it is highly likely that the Federal Reserve would hike interest rates at their next meeting in December following a Clinton win. On the other hand it is suggested a Trump win would result in uncertainty which could result in a weaker USD.

The USD currently trades at:

GBP/USD 1.2415, EUR/USD 1.1046, USD/CHF 0.9746, USD/JPY 104.43.

Bank of Japan and Federal Reserve

The Japanese Yen dropped overnight as the Bank of Japan kept its main policy rate at -0.1% but revamped its stimulus program and left its options open for further monetary easing in the future before returning to earlier levels. USD/JPY currently trades at 101.58, CHF/JPY at 103.99, EUR/JPY at 113.22 and GBP/JPY at 132.00.

In the USA the Federal Reserve meets this evening (19:00 UK) and is likely to keep rates on hold at their current 0.25-0.50% range. However, market participants will be looking for any comments which confirm the likelihood of a rate hike(s) before year end.

EUR/USD currently trades at 1.1147, GBP/USD at 1.30 and USD/CHF at 0.9770.

Elsewhere, EUR/GBP trades at 0.8575 (GBP/EUR 1.1662).

Central Banks

The US Dollar (USD) weakened overnight as the Federal Open Market Committee (FOMC) left its key interest rate unchanged at 0.50% and pared the outlook for more rate hikes this year. The market expectation is now that there will likely only be two 0.25% rate hikes this year, down from December’s prediction of four.

Whilst the Federal Reserve acknowledged that the US economy was expanding at a moderate pace, economic projections were downgraded with Real GDP forecast at 2.2% this year down from earlier predictions of 2.4%. The Federal Reserve acknowledged the growing risks of a weakening global economic outlook.

Today the market will focus on interest rate decisions from the Swiss National Bank (SNB) at 08:30, Norges Bank (Central Bank of Norway) at 09:00 and the Bank of England (BoE) at 12:00.

Opinions on what the SNB will do today are divided. There are some expectations that in response to the European Central Bank’s (ECB) easing the SNB might cut the range of its 3 month LIBOR rate to -0.50% and -1.50% from the current -0.25% and -1.25% range. However, as EUR/CHF is held well inside recent range and the ECB have ruled out more rate cuts, the pressure on the SNB to deliver lower rates today is limited so the SNB might opt to hold rates at current levels. Nonetheless, the SNB could have a dovish tone in the accompanying statement. EUR/CHF currently trades @ 1.0990, USD/CHF @ 0.9745 and GBP/CHF @ 1.3920.

The Norges Bank today is forecast to cut its key rate by 0.25% to 0.50% and the rate outlook is also likely to be revised down. EUR/NOK currently trades @ 9.46, USD/NOK @ 8.39 and GBP/NOK @ 11.99.

The Bank of England is expected to hold rates at 0.50% and its asset purchase facility at £375bn. It is unlikely the Bank of England will tighten its monetary policy in advance of the UK referendum on whether Britain should remain in the European Union due June 23rd. The prospect of a possible BREXIT means that the Pound is likely to remain under pressure and prevent any significant gains in the Pound. GBP/USD currently trades @ 1.4273, GBP/EUR @ 1.2660 (0.79p) and GBP/JPY @ 159.32.

POUND CONTINUES TO FALL ON FEAR OF BREXIT

The Pound (GBP) has fallen again today breaking below 1.40 against the US Dollar (USD) for the first time since March 2009 with the current low at 1.3880. Against the Euro the Pound has also fallen hitting a low so far of 1.2646(0.7908) on the interbank market.

29 out of 34 economists surveyed by Bloomberg anticipate the GBP/USD rate to fall to 1.35 (low 2009) or below in the event of a BREXIT. The last time GBP/USD traded below 1.35 was in 1985.
Please do not hesitate to contact the dealing team on telephone 01695 581 669 or by email info@currencymatters.co.uk for further information or for a live quote.

POUND FALLS, US DOLLAR SOARS.

Yesterday 05/11 the Pound tumbled in value following the Bank of England’s latest report which downgraded both the UK growth and inflation forecast and subsequently pushed out market expectations of a Bank of England interest rate rise. The Pound fell over 1% against all major currencies with GBP/EUR falling from 1.4199 to 1.3966 and GBP/USD falling from 1.5401 to 1.5203.

This afternoon 06/11 the US Dollar has appreciated strongly, more than 1%, following overwhelmingly strong US employment data. The US Dollar appreciated strongly against the Euro forcing EUR/USD down from an earlier high of 1.0892 to a low of 1.0707. The US Dollar also appreciated against the Pound with GBP/USD falling from 1.5219 to 1.5030. The US Dollar also appreciated against the Swiss Franc with USD/CHF appreciating from 0.9946, through parity to 1.0065. With the US Dollar appreciating more against the Euro than the Pound, GBP/EUR recovered from 1.3896 to 1.4065.

There is lots of global economic data due for release next week and we also have speeches from Bank of England Governor Mark Carney and ECB President Mario Draghi on Wednesday 11/11 which both have the potential to move the market.

Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for further information or for a live

 

 

Currency Matters

The Euro and US Dollar generally both traded lower following quieter markets during yesterday’s US bank holiday and as markets begin to shrug of concerns of China’s slowing economy increasing risk appetite. As a result GBP/USD appreciated from a low of 1.5162 yesterday to a high so far today of 1.5404 and currently trades mid-morning at 1.5380. GBP/EUR also appreciated to a high of 1.3786 after trading as low as 1.3592 yesterday. EUR/USD continues to trade between 1.11 and 1.12 and currently trades at 1.1160.

The currency markets are extremely volatile and Currency Matters can offer a number of products which can help eliminate currency risk and get you the best exchange rate available in the market.

CURRENCY MATTERS PRODUCTS:

Very simply, Currency Matters can send or receive any deliverable currency to or from any valid bank account anywhere in the world.

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This is the traditional foreign exchange contract where you buy a currency for settlement in two working days. Upon settlement we will make a payment according to your instructions. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Same day / next day foreign exchange:

We can offer same day and next day settlement for some of the major currencies, depending on amount and availability. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Forward Contract (Fixed Date):

A Forward Contract is one which is agreed for settlement at some fixed point in the future, after two working days. The Forward price is based on the current Spot price and adjusted for the interest rate differential between the currencies being bought and sold. This Forward rate may be more or less than the current Spot price. A small deposit is required to secure a Forward Contract. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Forward Contract (Variable Date):

Similar to the description of the Forward Contract above, but settlement is agreed to occur between two dates, at the client’s discretion, rather than on a fixed date. This is particularly useful when you don’t know precisely when you would need to settle with your counterparty. We will save you money by offering you a much better exchange rate compared to your high street bank.

 

Market Orders:

Currency Matters offer the facility to place market orders – either on a “limit” basis or on a “stop” basis. For example, you can place a limit order to buy your currency at a predetermined price, above the current rate. Alternatively you can place a stop order to buy your currency at a predetermined rate, below the current rate. We can also work orders on a “one cancels other” basis, so if you have both a limit and a stop order in place, and one is executed, the remaining order is automatically cancelled.

Please do not hesitate to contact a member of the dealing team on telephone +44 (0) 1695 581 669 or email info@currencymatters.co.uk for further information.

 

 

ECB & BoE Reaction: EUR Lower

The European Central Bank (ECB) will start its new government bond-buying programme on 9th March hoping to boost growth and lift inflation in the ailing Eurozone. The ECB plans to spend €60bn a month on buying sovereign bonds and some private sector assets with the purchases likely to last until at least September 2016.

In the UK the Bank of England (BoE) kept rates unchanged, meaning they have now been at their record low of 0.50% for six years. Whist none of the leading economists polled by Reuters expect the Bank of England Monetary Policy Committee to raise rates before the UK general election in May, there are some expectations that the BoE may increase rates sooner than currently forecast by the markets meaning that the ECB and BoE could have diverging monetary policies, thus supporting the Pound further against the Euro.

The Euro (EUR) fell to its lowest level against the US Dollar (USD) in over 11 years hitting a low so far of 1.1008 on the interbank market. The Euro also fell against the Pound (GBP) with EUR/GBP hitting a low of 0.7224 (GBP/EUR high 1.3842).

WEAK US RETAIL SALES DATA FORCES USD LOWER

The US Dollar (USD) has lost some of its recent gains following this afternoon’s release of much weaker than anticipated US retail sales data. EUR/USD recovered from 1.1728 to 1.1845, whilst GBP/USD rose from 1.5145 to 1.5267. USD/CHF fell from 1.0238 to 1.0139 and USD/JPY fell from 117.96 to 116.08.
Market focus now turns to European and US Inflation data released on Friday 16/01/15.

USD Strength

The US Dollar remains supported as US employment data beat expectations with the US employment rate falling from 5.8% to 5.6% the lowest level since June 2008. The Federal Reserve has held interest rates near zero since 2008 but expectations are increasing that the Federal Reserve will start to increase interest rates this year, possibly in the second quarter.
This coupled with the expectation that the European Central Bank will ease monetary policy has forced EUR/USD to its lowest levels since December 2005, hitting a low of 1763.
In the UK the Pound was supported earlier this morning by better than expected manufacturing and trade balance data pushing GBP/EUR to a high of 1.2844 and GBP/USD up to 1.5174 before receding to 1.2820 and 1.5096.

USD & CHF REACT TO FED & SNB

The US Dollar (USD) gained overnight as the Federal Reserve kept rates near zero and sounded more optimistic on the economy whilst maintaining their pledge to be patient on increasing interest rates. The Dollar appreciated against the Euro and the Pound forcing EUR/USD to a low of 1.2266 and GBP/USD to 1.5551.

In Europe, the Swiss Franc (CHF) has depreciated sharply today as the Swiss National Bank (SNB) introduced negative rates to try and stem the rise of the Franc pushing EUR/CHF from 1.2009 to a high of 1.2097 before settling around 1.2045. The US Dollar also gained against the Franc with USD/CHF appreciating from 0.9722 to 0.9846.