So here we are again with another look at how the currency markets have been shaping up over the last week. We had a reasonable week last time, with some good results and some not so good ones. We would have preferred all good of course, but at least we didn’t have a total washout.
Perhaps the best thing is to look at the individual victories. We did well against the US dollar, which in itself is something worth celebrating as we check the results on our currency converter. Our other victories last time around were against the Hong Kong dollar and the Australian dollar. We saw a small loss – very small in fact – against the Euro, while the biggest loss of the week was the three and a half cents we lost against the New Zealand dollar.
So what happened last week? Did this pattern of ‘more good than bad’ continue, or was it something that changed remarkably over the course of that time?
There has been speculation that the recession may be abating in some areas of the world. But other people think that this is too hopeful, too soon. As we have seen in the past though, speculation alone can be enough to make the currency market more buoyant – or take a nosedive, depending on how positive or negative the comments might be.
So could that be the case this time? Could we see results this time that are very similar to last week? Or will it be more positive or negative in some way? Let’s find out what actually happened shall we?
An overview of the currency markets for August 10th – August 16th 2009
So the pound managed to snag an increase of 0.0234 against the US dollar last time. That left it on 1.6758 at the week’s end, leaving us wondering whether we could capitalise on the increase we had just seen, or whether that was as good as it was going to get for now.
Well let’s see what happened. Monday didn’t start well, because we ended up on an exchange rate of 1.6638 by the end of the day. That signified a drop of just over a cent on the first day of the week, which certainly didn’t bode well for the rest of the week.
But that doesn’t mean it is all doom and gloom from here on in. You can never tell if such a drop early on in the week is going to be a bad sign overall. In this case it looked as though it might be however, because by the end of Tuesday the exchange rate had dropped even more. The pound stood at 1.6502 US dollars by the time everyone quit for the day, leaving us looking at a two day loss of 0.0256. And yes, that means we had lost all of the previous week’s increase (and then some) by the time we finished only the second day of the week.
So what would happen next? We almost didn’t want to look, given the evidence we had to go on for the first two days of the week. And indeed the midway point didn’t bode well either. By the time trading finished between the British pound and the US dollar at the close of Wednesday, we stood at 1.6483 against the dollar.
So were we looking at a washout week here, or would there be a last minute reprieve for the pound?
As it happened things did look a little better by the end of Thursday. That was when the exchange rate popped back up to 1.6645 again. So we had an increase of 0.0162 overnight, and that brought us to within a cent or so of where we had started the week initially.
But could we do better on the last trading day of the week? Actually the answer was no. We finished this sorry week on 1.6590, which meant that overall we had lost out on 0.0168. So we didn’t quite lose all the gains made the previous week, but it wasn’t a week to celebrate either.
Let’s move swiftly on now to see what happened to the British pound when it went up head to head against the Euro. Last time we had a small loss against it, so small that it didn’t really count for too much. It left us on 1.1672 for the week though, so let’s see what happened last week shall we?
In contrast to what happened against the US dollar, things looked rather better on Monday against the Euro. We managed to start the week on the right note here, and snag an exchange rate of 1.1715 by the end of the day. But was this a false start that would soon be lost, or just the start of something better?
Tuesday told the story. By the time the markets closed then, we were looking at an exchange rate of 1.1649. So we had dropped down slightly, although not by an awful lot. Was this the start of a slippery slope or was there more in store?
Wednesday’s result kept us guessing. By the time everyone headed home on that night we were sitting on 1.1632. So we had dropped back a little further, but only by a little. We had lost out on just 0.0017 since the day before, but a total of nearly a whole Euro cent since the end of Monday, just forty eight hours before.
What would happen now? You had the distinct feeling at this point that things could go in either direction for the remaining two days of the week.
Thursday went in our favour, as it turned out. Not by much, but it seemed to be a week where every step in the right direction against the Euro was something to celebrate, however small it might be. And the closing figure on Thursday was 1.1646.
So what happened on the final day of the week? Would we follow up that increase with another one, however small? Or would we slip back again?
Somehow you just knew that it was going to be another small drop in the wrong direction. The drop was to the tune of 0.004, as we fell back to 1.1606. That meant a total loss for the week of 0.0066. That wasn’t too bad, a little over half a Euro cent in all, but still a loss.
So what occurred in Hong Kong? As ever this is our third stop on the route of the five currencies we always take a look at, and last time we bagged an increase of 0.182 to land on 12.988 by the end of the week.
The trouble is, with a loss against the two major currencies we’ve looked at so far, does this mean we saw a loss here too? Let’s see.
We certainly didn’t start well, with a fall to 12.895 on the first day of the week. A loss on day one is never good for the self confidence, but it does make you cling on to the hope that things will improve very quickly. The problem is whether that hope is misplaced or not.
Well it seemed as if it was in this case, as the British pound once again failed to make any kind of impression on Tuesday. By the end of that day it was down to 12.790, leaking a total of 0.198 in just two days.
Things got worse the following day, although the rate of loss did slow down slightly. By the time we finished up closing for the day the exchange rate had dropped down to 12.775. What would happen in the remaining two days of the week?
As it happened things perked up on Thursday – mirroring the results we had seen elsewhere so far. By the time trading finished on that day we had settled on 12.902.
But it wasn’t long before we realised the week wasn’t going to go out on a high note. In fact we finished up on 12.857. So we had lost here as well overall, to the tune of 0.131 over the whole week.
That made three losses out of three, which hardly made us feel confident about checking the results of the final two currencies on our list, the New Zealand and Australian dollars. But ‘in for a penny and in for a pound’, to coin a suitable phrase, so let’s see what happened over there last week.
New Zealand saw a closing rate of 2.4880 the week before last. So it would be good to break back through that $2.50 barrier again – but would this be the week to do it in?
Judging by Monday’s result the answer would be a firm no. The final exchange rate on that day was 2.4585, plummeting by nearly three cents in a single day. So what on earth would happen next?
Well we were able to breathe at least a small sigh of relief, as we were able to claw back some of that loss the very next day. By the time Tuesday was over we were on 2.4610.
Wednesday got better still – although by ‘better’ we really mean just getting a chance to grab back some of those early losses. We finished the day on 2.4770. But don’t breathe a big sigh of relief just yet – because just twenty four hours later those increases were all wiped out. We stood at just 2.4481 by the end of Thursday night.
And on Friday night it was even worse – we could claim just 2.4123 New Zealand dollars to the pound.
Yes, we had in fact lost some seven and a half cents in a single week. What a dreadful loss – and it made us wonder whether a similar story was in store for us in Australia.
Our starting point against the Aussie dollar was 2.0031, so we were perilously close to going under the AUS$2 mark. And it happened on day one of the week as well. That was when we sank down to 1.9793 – and there was worse to come too. Tuesday sank a little further but thankfully the amount then was small. The exchange rate settled onto 1.9763.
We did manage to regain the two dollar territory briefly on Wednesday, but only by the skin of our teeth. We snagged just 2.0009 on that day, before saying goodbye to it again very shortly after trading resumed on Thursday.
And unfortunately by the time trading ended on Thursday we finished up on 1.9718. But as if that wasn’t bad enough we managed to do even worse by the end of Friday. That was when we snagged an impressive exchange rate of just 1.9659. And the total losses for the week here? They added up to 0.0372 in total.
So it doesn’t take much to see that the whole week was a complete washout for the British pound. We had five losses out of five, and while some weren’t that big, others were embarrassing. Better luck next week? Let’s hope so.
Notable events in the world of currency
New Zealand dollar gets the better of the US dollar
We weren’t the only ones to get beaten by the New Zealand dollar last week. the previous week had seen the US dollar finishing on 1.4846, but just one week later that had dropped to 1.4541.
Euro has choppy time against the Aussie dollar
We were hard pressed to keep up with the tussle between these two last week. From a starting point of 1.7161 the Euro dropped to 1.6895 by the end of Monday. Then two days later it sprang back to 1.7201 again against the Aussie dollar, before ending the week on 1.6939.
The Canadian dollar and the Swiss franc lock horns
It was something of an up and down tale between these two currencies as well. But in the end the Canadian dollar went from an exchange rate of 0.9837 to 0.9843 the following week.
There was plenty of currency news around last week, but one notable story concerned the situation regarding the Canadian dollar. It was reported on the Bloomberg website, and you can find it at this link.
So there we have it for another week – a week that would best be forgotten all in all. Let’s hope we have far better news to report next time. We’ll see you then.
I can’t believe the pound did so badly this week. What on earth happened? We’re all suffering alike in the recession so I don’t quite see how we could be the ones to suffer so badly at the moment.
Hopefully this is just a one off and next time will see some better results, but somehow I doubt it. And in fact I just read the latest report – it does look a little better but not as good as we’d have liked!
Sorry to sound pessimistic but I reckon there is worse to come over time. Brace yourself if you reckon the pound has just had a small dip and nothing more. I think it will be worse than that.
I don’t think we are the only ones to be experiencing poor exchange rates with other countries. This report is clearly focused more on the pound than anything else, and that is why it tends to look bad when we get a run of bad news. Other currencies are struggling just as much as we are – they just aren’t included in this report.
Mind you it would be nice to see which currencies the pound is doing well against. Maybe we’ll see this in future reports? It certainly helps to cheer things up a bit on bad weeks where it looks like every other currency is beating it.