Sterling relatively unchanged overnight, although there is reported corporate interest to sell the Pound ahead of $1.5900 and £/€ 1.2100 levels.

Stronger UK manufacturing output according to the PMI data yesterday led the Pound higher initially but predominately more so against the weaker USD. There is market talk of corporate interest to sell Sterling above $ 1.5900 as well as above € 1.2080 levels for the time being.

December’s action by the ECB that reduced the European banks recent liquidity issues and confirmation at January’s US FOMC meeting that interest rates will remain low until the end of 2014, gave global indices a needed boost as we `kicked off’ the New Year.  This resulted in a pull back for the Euro and the first decent correction in the USD that we have seen for a while, after its long term positive trend.  The EU summit at the end of January also agreed to a financial pact, giving the EU Commission greater scrutiny in an effort to cut budget deficits (Euro positive).  Commodity based currencies remain very strong.

USD

At the beginning of the month the USD tested a 15 month high versus the Euro.  Refusal to hold below €/$1.2700 levels saw an aggressive rebound in the Euro’s favour as Fed Chairman Bernanke surprisingly predicted that the FOMC believe interest rates will remain at these lower levels until at least late 2014 and that further asset purchases would not be ruled out (Q/E 3) should the need arise. This resulted in a good bounce for global stocks as well as a correction for the USD after its gain of approximately 10% against the Euro from mid 2011.  The `risk on’ scenario by global investors may result in further short term USD weakness going forward.

USD Trend: GBP v USD   USD Neutral   EUR v USD USD Neutral  USD v CAD, AUD v USD, NZD v USD, USD v ZAR  USD Negative  USD v JPY USD Negative

GBP

Sterling reached a 16 month high against the Euro (1.2158) only to `top out’ influenced by the ECB action last month, as well as the fact that further asset purchases by the Bank of England (Q/E) have also not been ruled out.  The Pound has been relatively range-bound against the USD between $1.5400 and 1.5700 levels, only to end the month above the latter and possibly now targeting 1.59+ in the weaker USD environment.  Sterling traded at record lows versus the AUD and NZD.

GBP Trends: GBP v EUR GBP Neutral  GBP v USD GBP Neutral  GBP v AUD, CAD, ZAR GBP Negative   GBP v JPY GBP Negative   GBP v Eastern Europe GBP Neutral

EUR

There was a good correction for the Euro as it bounced from below the Sub $1.2700 levels.  The EU summit at the end of January resulted in the EU Commission having greater scrutiny in the budget cutting efforts of 25 member states (with exception of UK and Czech Republic). This has led to the Euro trading the positive side of $1.3000.  The next technical target to watch is the $1.3300 level, although some technical traders indicate that this is the maximum.  A higher Euro would not benefit the Euro Zone at present and Portugal’s higher bond yields do concern the markets somewhat, although a deal on the Greek private bond holders should be reached by the end of the first week in February.

EUR Trends: - EUR v GBP EUR Neutral   EUR v USD EUR Neutral   EUR v AUD, CAD, ZAR EUR Negative EUR v JPY EUR Negative

AUD, CAD, NZD, ZAR

Commodity based currencies continue to trade in tandem with global stocks.  The stock market recovery towards the year end and beginning of 2012 bodes well for these currencies, in particular the AUD and NZD (due to interest rate differentials).

Commodity currency Trends:-CAD, AUD, NZD Positive versus GBP, Positive v EUR, Positive v USD   ZAR Positive v GBP/USD/EUR

CHF

Since the `pegging’ against the Euro at 1.20, the Swiss Franc has traded in a relatively tight range.  The resignation of the Swiss National Bank President gave way for the market to test sub EUR/CHF 1.2100.  We await signals from the Central bank of support for the pegging of last year, failure to do so could result in a rapid strengthening of the CHF, albeit short term against a basket of currencies.

CHF Trend: Neutral

JPY

There was no intervention this month with the Yen trading in tight ranges.  There is certainly a lack of speculative interest as we close the year with the Yen holding onto its long term record levels against a basket of currencies.  A general slowdown in the economy, as well as Japan’s declining exports does little to halt the Yen’s rise.  We end the month with more rumours of potential Bank of Japan intervention.

JPY Trend: USD v JPY  JPY Positive   GBP v JPY  JPY Positive  EUR v YEN  JPY Positive

Current Rates (1^st February 2012)

Jan Monthly Ranges

Corporate demand for Sterling mentioned last week ahead of the $1.1900 level has since seen the Pound rally further, the next resistance being € 1.2100, ahead of this level however there is now reported corporate selling interest. Sterling is still trading firm against the USD above $ 1.5700, and now technically targets $ 1.59+ UK Manufacturing PMI data will be closely watched today.

Sterling opens above the resistance level of $ 1.5700 and relatively unchanged versus the Euro. Stock markets have opened a little firmer indicating further potential USD weakness for the time being.

Overall the USD is a little firmer from Friday’s closing levels. Sterling opens just below the $ 1.5700 resistance level and there is rumoured month end demand for Euros versus Sterling.

At the Davos World Economic Forum we have seen very mixed comments and views, from both government officials and business leaders, on the world economy as well as Europe going forward.

The recent negative trend for the Euro has reversed for the time being but concerns over Portugal’s growing debt burden will certainly keep the market thinking.

With the Federal Reserve confirming that rates will remain `low’ until 2014, this should be positive for stock markets, risk and commodity based currencies, therefore the USD should be sold on rallies.

Sterling bounces from the low € 1.19’s (corporate demand) and a solid close above $ 1.5750 would technically target 1.6000.

No major news from the opening day of the world economic forum in Davos and the GBP/EUR rate remains range bound between 1.1900-1.2050

In Europe the German IFO (business confidence)index is also due to be released at 9.30 and is expected to rise for the third consecutive month in January cementing the trend of improving data since the start of the year. Later on today we have the FOMC rate decision with no change widely expected.

Sterling initially opened a little weaker versus the Euro but range bound versus the USD. There was Sterling corporate demand this morning  (mentioned last week) ahead of £/€ 1.1900 level and has again traded firmer after the UK Public sector borrowing confirmed that the UK are on the right track (lower than the forecasts).

Markets remain relatively calm despite the uncertainty around the Greek deal, with Greek officials reportedly confident an agreement will be reached by the time of the January 30^TH European leaders summit. 

Weaker UK unemployment yesterday and the re-emergence of a political war of words with Argentina over the Falkland Islands will keep Sterling traders `on their toes’.

The USD opens a little weaker across a broad range of currencies. In the UK inflation appears to be heading in the right direction as predicted by the BoE last year, this may increase the calls for further Q/E 3 going forward. Sterling opens just above € 1.2000 level today.

Sterling also higher against the USD, but trading lower versus the Euro as the Pound looks to be somewhat range-bound for the time being.

Sterling has recovered again against the weaker Euro, however relatively unchanged against the USD. There are now some bearish calls being made by economists for the Pound. Today is a bank holiday in the U.S. (Martin Luther King day).

Sterling collapsed yesterday, rates were also left unchanged by the BoE, however the MPC committee indicated that extra asset purchases (Q/E) are likely to be announced next month. Add this to dire results for supermarket giant Tesco as well as weaker UK export orders and industrial production, the Pound came under further selling pressure against a basket of currencies other than the weaker USD.

As we end the week, stock markets have held onto their gains, technically there are signals that a correction in the longer term USD positive trend is possible.

Sterling has weakened also. UK exports to countries outside of Europe fell dramatically and as a result the Pound has opened nearly -.0100 points lower versus the Euro from the recent 15 month highs. Sterling was also sold against the USD as we cleared through the € 1.5400 level and now almost 1% lower ahead of today’s BoE rate decision. Commodity based currencies also benefit as stock markets hold onto this year’s gains.

During December the Euro traded at 11 month lows both against the USD and Sterling.  Markets still remain Euro bearish into 2012 as the E17 leader’s summit produced little to convince markets that a solution to the Euro Zone crisis was any nearer.  Stock markets have recovered somewhat based on the easing of liquidity problems the European banks have been faced thanks to the recent European Central Bank action.  Prime Minister David Cameron refused further treaty amendments thus distancing the UK from our European partners.  Commodity based currencies were also strong in line with the stock market recovery.

USD

The overall trend for the USD is still positive as the USD traded at an 11 month high against the Euro this month.  The continued positive economic readings including employment data gives a sense of optimism in the USA as we look forward to 2012.  Stock markets have slightly recovered after global central bank action to free up cheap USDs.  One set-back for the USD was a surprisingly lower final US GDP reading for Q3.  This can be a volatile number and is more likely to show some adjustments in the next Q4 GDP reading.  US consumer confidence showed an aggressive jump in December adding to the positive `feel’ (highest since April).

USD Trend: GBP v USD   USD Positive   EUR v USD USD Positive   USD v CAD, AUD v USD, NZD v USD, USD v ZAR  USD Neutral  USD v JPY USD Neutral

GBP

The UK retained its `AAA’ status by ratings agencies.  As a result Sterling rallied to an 11 month high versus the Euro trading above € 1.2000 level. The IMF also stated that the UK’s plan to reduce its deficit was workable, but reminded us that potential Euro Zone recession would without doubt have an impact on the UK economy.  Markets were surprised by PM Cameron’s stance in distancing the UK from closer fiscal unity by refusing to enter into any treaty amendments at the Euro leaders’ summit.

GBP Trends: GBP v EUR GBP Positive   GBP v USD GBP Negative GBP v AUD, CAD, ZAR GBP Negative   GBP v JPY GBP Neutral   GBP v Eastern Europe GBP Positive

EUR

So the uncertainty carries on as the Euro Zone crisis doesn’t look anywhere near over.  Further threats of downgrades for some member nations will increase the cost of funding for some.  The first tranche of `cheap’ three year loans to banks from the ECB was surprisingly high in demand, this confirming the depth of the illiquidity issues.  E17 members agreed in principal to amend the treaty which would allow closer fiscal ties, these however have to be approved by individual governments (expected around March 2012) thus extending the timeframe for any real solution to the Euro crisis.

EUR Trends: - EUR v GBP EUR Negative   EUR v USD EUR Negative   EUR v AUD, CAD, ZAR EUR Negative EUR v JPY EUR Negative

AUD, CAD, NZD, ZAR

Commodity based currencies continue to trade in tandem with global stocks.  The stock market recovery towards this year end keeps these currencies somewhat underpinned.

Commodity currency Trends:-CAD, AUD, NZD Positive versus GBP, Positive v EUR, Positive v USD   ZAR Positive v GBP/USD/EUR

CHF

Since the `pegging’ against the Euro at 1.20, the Swiss Franc has traded in a relatively tight range.  There were no comments from the Swiss National Bank this month relative to a higher pegging to the Euro.

CHF Trend: Overall Negative

JPY

No intervention this month with the Yen trading in tight ranges.  There is certainly a lack of speculative interest as we close the year with the Yen holding onto its long term record levels against a basket of currencies.

JPY Trend: USD v JPY  JPY Neutral   GBP v JPY  JPY Neutral   EUR v YEN  JPY Neutral

Current Rates (3^rd Jan)

Nov Monthly Ranges

Sterling is more or less unchanged although the British Chambers of Commerce stated that easier access to credit must be made available to companies in order to avoid any further downturn in the UK economy.

The USD dollar firmed again Friday after the better than expected non-farm payroll data. Sterling opens still above € 1.2100, and major support comes in at $ 1.5400 where there are rumoured bids for the Pound for the time being.

The USD positive trend remains intact, although traders will wait for the results of U.S. non-farm payrolls today as we approach the next major Euro support level of €/$ 1.2700. Sterling trading in a tighter range against the USD, but above the resistance level of € 1.2100, if we can hold above here over the next few sessions, a potential technical target of € 1.2350+ would be expected.

Sterling traded at a 15 month high against the Euro testing the € 1.2100 level briefly where there is rumoured to be corporate interest to buy Euros for the time being. Against the USD, Sterling looks range bound between 1.55 and 1.57 where there is rumoured corporate interest both sides. There are also growing fears on the Iranian situation, the impact of higher oil prices is likely to hit European economies in the short term more than economies elsewhere. 

Sterling is still in demand on any dips versus the Euro as seen yesterday below € 1.1950. Commodity based currencies benefit from this stock market rally as oil trades above $ 102. Market sentiment remains however Euro bearish in the medium term.

Sterling continues to hold onto its recent gains against the Euro and corporate orders are rumoured to be placed above $ 1.5700 levels as previously seen in late December. Oil is trading above the $ 100 levels as Iran warns the West after testing missiles and threatening to close the Straits or Hormuz, commodity based currencies are stronger on this news also.

The overall US dollar uptrend looks set to continue for the time being with only the odd bout of pre-holiday profit taking likely to provide the euro with short term support. 

Happy Holidays from all at Worldwide Currencies.

GBP/EUR continues to be driven by EUR/USD with the latter finding support at 1.3000 as improved US economic data reduces the flight into safe haven currencies thus putting pressure on USD. Despite using their veto at last week’s EU Summit the UK government has been invited to participate in talks with the other 26 members of the EU, who are trying  to agree on a Euro fiscal pact. Although GBP/EUR should be supported at 1.1880, the single currency is likely to find strong corporate demand at 1.2000. 

Sterling holding firm against the Euro as the USD weakens slightly ahead of the UK rate decision today.

Sterling opens a little weaker against a basket of currencies ahead of industrial/manufacturing data due today.

The U.S. non-farm payroll data failed to disappoint. Sterling is relatively unchanged today and for the time being the positive USD trend remains in-tact.

We ended the month again with another volatile day.  The five major Central Banks decided to lower USD rates for the funding of swap lines.  This action eased the liquidity problems faced by particularly European banks.  Global stock markets fell throughout the month but rallied on this news aggressively and clawed back most of the losses seen (Dow Jones Index +8% from lows of the month).   A number of solutions for sovereign debt issue within the Euro Zone are still being discussed by leaders and officials.  The expected plans for closer fiscal unity are a strong possibility at some stage in an attempt to save the Euro.  The main beneficiary on the month was the US Dollar predominately against European currencies.  Sterling also performed well against a basket of currencies other than the USD, only to give back some those gains back on the 29 and 30^th November.

USD

The overall trend for the USD is still positive, despite the Central Bank action on 30/11/11. The USD gained against the Euro approximately +5% on the month, the Euro having traded briefly at sub €/$ 1.33 levels from the highs of €/$ 1.3900s.  Economic data continues to show signs of improvement in the US including employment growth.  There are technical signals that the recent USD strength may have peaked for the time being, and the global stock market rally on the 30th also supporting this view.  The special committee which was set up to resolve the ever worsening US budget deficit problems announced that they had failed to reach any agreement, but this had little impact on the USD.

USD Trend: GBP v USD   USD Negative   EUR v USD USD Positive   AUD v USD-NZD v USD-USD v ZAR  USD Positive  USD v CAD USD Neutral  USD v JPY USD Neutral

GBP

Sterling traded positively against a basket of currencies (other than the USD) during November.  Sterling is seen somewhat as a `safe haven’. UK gilts performed well and borrowing costs for the UK remain low in comparison to some of the Euro Zone sovereign nations.  The stronger USD saw Sterling trade in the low $ 1.54’s from $ 1.62 levels, but recovered towards the month end to just over $ 1.57.  In the autumn statement on the economy Chancellor Osborne conceded for the second time this year that growth would be weaker, borrowing higher and higher unemployment in the UK than predicted, in the wake of a worsening outlook around the globe. The Pound continues to find corporate interest to buy Euros above the € 1.1700 level against the Euro.

GBP Trends: GBP v EUR GBP Positive   GBP v USD GBP Neutral   GBP v AUD, CAD, ZAR GBP Negative   GBP v JPY GBP Positive   GBP v Eastern Europe GBP Positive

EUR

Where do we start? European technocrats now run Italy and Greece, the EFSF fund is viewed as a failure by many economists and the questions as to whether the ECB will make a shift in its bond buying program against the will of Germany or not.  These are the reasons why the Euro has weakened.  A rate cut again this month by the ECB is possible and the E17 meeting between Euro leaders and officials will take place next week.  There are undoubtedly expectations of a final plan to be introduced to stabilize this sovereign debt problem with Merkel showing signs that the ECB might just change its stance.  There is also further talk of Euro/Stability bonds being introduced.  The Euro recovered on the last day of the month ahead of next week’s E17 meeting which is eagerly awaited for news on the possibility of closer fiscal unity (which would be Euro positive).

EUR Trends: - EUR v GBP EUR Negative   EUR v USD EUR Negative   EUR v AUD, CAD, ZAR EUR Negative EUR v JPY EUR Neutral

AUD, CAD, NZD, ZAR

Commodity based currencies saw some aggressive corrections when global indices collapsed amid fears of a global recession, trading ranges were aggressive (see charts below).  All historically trade in tandem to stock market movements, the reversal on the 30/11/11 was just as aggressive as we end the month on a positive note.

Commodity currency Trends:-CAD, AUD, NZD Positive versus GBP, Positive v EUR, Positive v USD   ZAR Positive v GBP/USD/EUR

CHF

Since the `pegging’ against the Euro at 1.20, the Swiss Franc has traded in a relatively tight range.  There are still rumours of a higher pegging being set at 1.25 at the next meeting, but these have been rumoured before.

CHF Trend: Overall Negative

JPY

Despite further intervention last month the Yen continues to trade in tight ranges.  Authorities have undoubtedly signalled their intention to support the USD versus Yen, but there continues to be lack of follow through from these interventions made this year by the Bank of Japan.

JPY Trend: USD v JPY  JPY Neutral   GBP v JPY  JPY Neutral   EUR v YEN  JPY Neutral

Current Rates (1st Dec)

Nov Monthly Ranges

Regards

October proved to be another volatile month as the Euro made a dramatic recovery in the build-up to the Euro leaders meeting that proposed plans to further aid Greece and, in principal, increase the size of the bail-out fund (EFSF).  As stock markets welcomed this news, the USD became the main loser as both Sterling and Euro rallied against the ailing USD.   There was a sharp correction back in favour of the Euro which was a reversal of the trend witnessed in September.   At the G20 meeting on 3/11/11 the market expects more detailed plans.  However, in a surprise statement as this report is being written (31/10/11), the Greek Prime Minister Papendreou shocked global markets stating that a Greek referendum will be held over the Greek austerity proposals.  These gains for the Euro that day stalled and stocks closed on a weaker note.  Earlier this month the Bank of England announced QE2 to the tune of £75 billion. Not for the first time this year, the Bank of Japan also intervened in the market on the last day of the month in an attempt to weaken the Yen.

USD

There is still a linkage of the USD versus stock market movements, higher stocks = weaker USD and vice versa.  The fact that European heads reached, in principal, a plan for some resolve for the Euro Sovereign debt issue that has haunted the Euro Zone for the last two years, led to a global stock market recovery up until 31/10/11. Having seen the USD gain almost 10% against the Euro in September and early October, the USD reversed and gave back 8% of those gains up to Friday 28/10/11.  The above news on the Greek announcement has seen the USD maintain its strength gaining nearly 3% against the Euro as we closed the month.  Intervention by the bank of Japan on 30/10/11 in an attempt to weaken the Yen has also given additional support to the USD.  Stronger employment figures, retails sales and GDP data from the US this month has certainly given a little confidence to global stock markets despite the Greek news.

USD Trend: GBP v USD USD Positive EUR v USD USD Positive AUD v USD-NZD v USD-USD v ZAR USD Positive  USD v CAD USD Positive USD v JPY USD Positive

GBP

Despite an initial `sell off’ of Sterling after the Bank of England confirmed another round of QE to the tune of £75 billion, the Pound stabilized as the USD weakened.  There was corporate interest to sell the Pound versus Euro between 1.1600 - 1.1700 levels repeatedly, enough to push the Pound lower after the QE2 announcement.  Sterling looks to be range bound between € 1.1350 and € 1.1700.  From $ 1.53 levels the Pound also rallied approximately 5.5% to $ 1.61+ in the weaker USD environment.  We await any results from the G20 as an indicator to the next move for the USD and Euro.  Sterling is range bound against commodity based currencies, as the latter react in line with global stock movements.  UK officials still remain pessimistic about the economy but the Pound still regarded as somewhat of a `safe haven’ with the problems in the Euro Zone resurfacing.

GBP Trends: GBP v EUR GBP Positive  GBP v USD GBP Neutral   GBP v AUD, CAD, ZAR GBP Neutral   GBP v JPY GBP Positive   GBP v Eastern Europe GBP Positive

EUR

Having lost 10% versus the USD (low 3/10/11-$ 1.3150), we traded above $ 1.42 as of Friday 28/10/11.  The Euro rose ahead of the Euro Leaders meeting and continued its rally after plans were finally agreed between E17 leaders.  A 50% haircut was agreed for holders of Greek bonds (effectively a bail-out), the rescue fund (EFSF) has been in principal increased and more details will follow after G20.  The fund would also be leveraged and Euro Zone officials are reported to be selling EFSF investment to the Chinese in order to bolster the fund.  Then after the announcement by Greece (31/10/11), the Euro was sold heavily. There is still much pessimism over the Euro Zone and views are mixed.  Eyes are now on Italy as further downgrades threaten, as well as press talk of `prevention of further haircuts’ or in other words contagion (Portugal, Ireland, Italy).

EUR Trends: - EUR v GBP EUR Negative   EUR v USD EUR Negative  EUR v AUD, CAD, ZAR EUR Neutral EUR v JPY EUR Neutral

AUD, CAD, NZD, ZAR

Australia announced 0.25% cut in rates (1/11/11).  However this was expected most commodity based currencies have reacted positively during the course of this month as stock markets have recovered (one exception the ZAR).  As an indication, Sterling traded briefly above AUD$ 1.63+ (4/10/11) and prior to the rate cut we were trading at 1.50 (8% gain for AUD).  Political uncertainties in South Africa continue to keep the Rand under pressure.

Commodity currency Trends:-CAD, AUD, NZD Neutral versus GBP,  Neutral  v EUR, Negative v USD  - ZAR Negative v GBP/USD Neutral v EUR

CHF

The Swiss National bank remains steadfast and has effectively pegged the CHF at 1.20 to the Euro.  As a result the CHF has maintained its weakness, even versus the Euro.  Expectations remain negative as the Central bank is committed to a weaker CHF over time in an attempt to protect the economy.  Do not rule out further intervention or negative interest rates.

CHF Trend: Overall Negative

JPY

Last month we mentioned there could be further intervention by the Japanese authorities.  As this report is being written, the Bank of Japan intervened and pushed the USD up from $ 75.30 to a high of 79.50 (a loss of 5% for the Yen) in the Far East markets on the 31^st.  The last intervention level was at $ 76.80 level in August 2011.  It appears that Japan is trying to tell markets that the Yen has peaked.

JPY Trend: USD v JPY  JPY Negative   GBP v JPY  JPY Negative   EUR v YEN  JPY Neutral

Current Rates (1st Nov)

Oct Monthly Ranges

ECB leave rates unchanged, the main beneficiary today is the USD. We wait for comments from the press conference at the ECB at 1.30pm for future indications on monetary policy.

Tomorrow we wait for the all-important non-farm payrolls from the U.S. 

No sooner had we entered the month of September, Greece then became the main contributor to the decline of the Euro.   Once again Greece is unable to meet their obligations despite the austerity measures introduced during the last year.  This has led to further concerns and fears of contagion within the Euro Zone. With global economic growth being downgraded, stock markets crashed, and the Euro lost almost 10% in value from its highs against the USD, the USD being the main beneficiary against a basket of currencies.  Sterling also rallied against a basket of currencies (other than the USD).  

USD

The weaker Euro and European sovereign debt scenario saw most global investor risk trades being reversed, including stocks and gold.  The USD index broke some very good resistance levels as investors bought USD from the beginning of the month.  Going forward, any solutions over the European situation will dictate the next move, although this is expected to take some time.  With the speed of this move in the USD favour, do not be surprised to see a correction.  US manufacturing data this week (3/10/11) has seen an uptick in activity.

USD Trend: GBP v USD USD Positive EUR v USD USD Positive AUD v USD-NZD v USD-USD v ZAR USD Positive  USD v CAD USD Positive  USD v JPY USD Negative

GBP

We saw the Pound rally and test seven month highs versus the Euro, AUD and CAD.  As is the norm, the stronger USD scenario is normally good for the Pound against this basket of currencies, particularly versus the Euro (high 1.17+).  Having rallied to $ 1.65+ last month, the Pound lost approximately 7% against the stronger dollar.  With a plan in place to reduce the UK sovereign debt as well as `AAA’ status, the Pound looks a relatively attractive `safe haven’ in these testing times.  There is a strong possibility this month (Oct) or next, another round of QE 2, to the tune of £ 50 billion, may be introduced in an attempt to stimulate the economy.

GBP Trends: GBP v EUR GBP Positive   GBP v USD GBP Negative   GBP v AUD, CAD, ZAR GBP Positive   GBP v JPY GBP Negative   GBP v Eastern Europe GBP Positive

EUR

Inability of Greece to fulfil its commitments, inability of Euro Zone leaders to reach vital decisions in order to convince markets contagion will not gather steam and the political battles within Italy, France and Germany just confuses markets even more.  To date there have been no resolutions from these ECO FIN meetings but the EFSF (bail-out fund) is likely to be increased to € 2 trillion.  One common theme emerging is that closer fiscal integration is inevitable and that Greece `cannot fail’.  There is some doubt over whether the market believes this or not.  French banks are massively exposed to Greek debt and may require re-financing, liquidity within the Euro Zone is reminiscent of the experience witnessed in the UK in 2008/2009.

EUR Trends: - EUR v GBP EUR Negative   EUR v USD EUR Negative   EUR v AUD, CAD, ZAR EUR Negative EUR v JPY EUR Negative

AUD, CAD, NZD, ZAR

Due to the global stock markets being sold and the potential global slowdown of economic growth, these currency pairings have seen an aggressive correction as risk trades are reversed by global investors.  As an example the AUD has tested 1 year lows versus the USD and is relatively weak even against the EUR.

Commodity currency Trends:-Negative versus GBP,  Positive  v EUR, Negative v USD

CHF

The Swiss National bank remains steadfast and has effectively pegged the CHF at 1.20 to the Euro.  As a result the CHF has maintained its weakness, even versus the Euro.  Expectations remain negative as the Central bank is committed to a weaker CHF over time in an attempt to protect the economy.  Do not rule out negative interest rates.

CHF Trend: Overall Negative

JPY

The yen has remained strong throughout this turbulent month despite the threat of intervention by the Bank of Japan.  Potential intervention cannot be ruled out as the yen is at its strongest ever levels versus the USD and ten year highs against the Euro.  The Japanese Finance minister is due to travel to the US in the second week of October.

JPY Trend: USD v JPY  JPY Positive   GBP v JPY  JPY Positive   EUR v YEN  JPY Positive

Current Rates (5^th Oct)

Sept Monthly Ranges

For further currency information, please call John Redford (0203 326 4502) john.redford@worldwidecurrencies.com

During August the biggest mover was the Swiss Franc following the action taken by the Swiss National Bank to halt its long term strength.  Commodity based currencies saw long term position unwinding and rapidly weakened on the Swiss news, although this was short lived.  Stock markets saw a turbulent month losing approximately 10% after Standard and Poor’s decision to downgrade the U.S. credit rating.  However, stocks managed to recover more than half of the losses towards the second half of the month as US politicians agreed finally on the raising of the U.S. debt ceiling.  Debt in Europe and the US continued to dominate the financial news, and is expected to do so for some time to come.  

USD

Despite the fact that the Dollar rallied on the US downgrade by Standard & Poor’s, it remains range bound versus EUR and GBP. We await the possibility of further stimuli to the US economy from the Federal Reserve.  One such stimulus being mooted is the re-financing of mortgages to those home owners in negative equity. This may be in the short term Dollar positive, but should stock markets rally on this, the `down Dollar, up stocks’ trend would be the more likely out-come.  Rates will remain `low’ for the next two years in the US.  China also voiced concerns over the US downgrade.

USD Trend: GBP v USD USD Neutral EUR v USD USD Negative AUD v USD-NZD v USD-USD v ZAR USD Negative  USD v CAD USD Negative  USD v JPY USD Negative

GBP

Sterling rallied to a four month high versus the Euro and a three month high versus the USD.  The market focused on the embedded austerity plans in the UK over that of the somewhat clouded austerity picture in the Euro-Zone.  Sterling lost its momentum and lost ground at the end of the month.  The main contributors being the usual end of month Euro demand for UK payments to the EU, and continued Spanish and Italian bond purchases by the ECB.

GBP Trends: GBP v EUR GBP Neutral   GBP v USD GBP Neutral   GBP v AUD, CAD, ZAR GBP Negative   GBP v JPY GBP Neutral   GBP v Eastern Europe GBP Neutral

EUR

The fears of further contagion in the Euro-Zone decreased as the ECB signalled that they would "actively implement" Spanish and Italian government bond purchases.  New austerity measures have been passed by both countries, although Italy made some amendments such as the lowering the tax on` high earners’. These amendments halted the recent move above $ 1.4500 level this week.  China is reported to be a consistent buyer of Euros for European sovereign bonds on any signs of weakness, seen as a further diversification out of U.S. Treasuries.

EUR Trends: - EUR v GBP EUR Neutral   EUR v USD EUR Positive   EUR v AUD, CAD, ZAR EUR Negative EUR v JPY EUR Negative

AUD, CAD, NZD, ZAR

All commodity based currencies witnessed an aggressive correction in their long term strength.  This was triggered by Swiss National Bank action against the Swiss Francs long term strength as well as the `sell off of global stocks’ attracting long term position unwinding these commodity currencies.  The correction in AUD, CAD, NZD and ZAR was however short lived as the fundamentals of interest rate differentials and steady economies remain unchanged.

Commodity currency Trends:- Positive versus GBP,  Positive  v EUR, Positive v USD

CHF

In a bid to halt the rising value of the franc, the Swiss National Bank reduced official interest rates by 50 basis points to a target range of 0-0.25 per cent.  It is the first time the SNB has lowered the interbank Libor rate since March 2009 and reflects growing pressure on the bank to act to counter the effects of the runaway Franc on the Swiss economy.  From the lows to the highs seen this month, the Franc has weakened over 18% against the Euro and Sterling, and 15% versus the Dollar.

CHF Trend: Overall Negative

JPY

Mixed data will weigh on new Prime Minister Noda (former Finance Minister), this being the sixth Prime Minister in five years. The Yen has done very little and remains at record levels.  Japan faces severe economic challenges, with the most worrisome debt-to-income ratio in the industrialized world. There has been no direct intervention from the Bank of Japan this month as the Yen remains unfavourably strong for Japan.  

JPY Trend: USD v JPY  JPY Positive   GBP v JPY  JPY Positive   EUR v YEN  JPY Positive

Current Rates (2^nd August)

July Monthly Ranges

For further currency information, please call John Redford (0203 326 4502) john.redford@worldwidecurrencies.com

The biggest mover this month was the Swiss Franc after the action taken by the Swiss National Bank to halt its long term strength. Commodity based currencies saw long term position unwinding and rapidly weakened on the Swiss news, although this was short lived. Stock markets saw a turbulent month losing approximately 10% after Standard and Poor’s decision to downgrade the U.S. credit rating. However stocks managed to recover over half the losses towards the second half of the month, U.S. politicians agreed finally on the raising of the U.S. debt ceiling. Debt in Europe and the U.S. continue to dominate the financial news, and is expected to do so for some time to come.

USD

Despite the fact that the Dollar rallied on the U.S. downgrade by Standard & Poor’s, it remains range bound versus EUR and GBP. We await the possibility from the Federal Reserve of further stimuli to the U.S. economy, one such stimulus being mooted is the re-financing of mortgages to those home owners in negative equity. This may be in the short term Dollar positive, but should stock markets rally on this, the `down Dollar, up stocks’ trend would be the more likely out-come. Rates will remain `low’ for the next two years in the USA. China also voiced concerns over the U.S. downgrade.

USD Trend: GBP v USD USD Neutral EUR v USD USD Negative AUD v USD-NZD v USD-USD v ZAR USD Negative USD v CAD USD Negative

USD v JPY USD Negative

GBP

Sterling rallied to a four month high versus the Euro, and three month high versus the USD. Market focused on the embedded austerity plans in the U.K. over that of the somewhat clouded austerity picture in the Euro-Zone. Sterling lost its momentum, and lost ground at the end of the month, contributors being the usual end of month Euro demand for UK payments to the E.U. and continued Spanish and Italian bond purchases by the ECB.

GBP Trends: GBP v EUR GBP Neutral GBP v USD GBP Neutral GBP v AUD, CAD, ZAR GBP Negative GBP v JPY GBP Neutral GBP v Eastern Europe GBP Neutral

EUR

The fears of further contagion in the Euro-Zone decreased as the ECB signalled that they would "actively implement" Spanish and Italian government bond purchases. New austerity measures have been passed by both countries, although Italy made some amendments such as the lowering the tax on` high earners’, these amendments halted the recent move above $ 1.4500 level this week. China is reported to be a consistent buyer of Euros for European sovereign bonds on any signs of weakness-further diversification out of U.S. Treasuries.

EUR Trends: - EUR v GBP EUR Neutral EUR v USD EUR Positive EUR v AUD, CAD, ZAR EUR Negative EUR v JPY EUR Negative

AUD, CAD, NZD, ZAR

All commodity based currencies witnessed an aggressive correction in their long term strength. This was triggered by Swiss National Bank action against the Swiss Francs long term strength as well as the `sell off of global stocks’ attracting long term position unwinding these commodity currencies. The correction in AUD, CAD, NZD and ZAR was however short lived as the fundamentals of interest rate differentials and steady economies remain unchanged.

Commodity currency Trends:- Positive versus GBP, Positive v EUR, Positive v USD

CHF

In a bid to halt the rising value of the franc, the Swiss National Bank reduced official interest rates by 50 basis points to a target range of 0-0.25 per cent. It is the first time the SNB has lowered the interbank Libor rate since March 2009, and reflects growing pressure on the bank to act to counter the effects of the runaway Franc on the Swiss economy. From the lows to the highs seen this month, the Franc has weakened over 18% against the Euro and Sterling and 15% versus the Dollar.

CHF Trend: Overall Negative

JPY

Mixed data will weigh on new Prime Minister Noda (former Finance Minister), this being the sixth Prime Minister in five years. The Yen has done very little and remains at record levels. Japan faces severe economic challenges, with the most worrisome debt-to-income ratio in the industrialized world. No intervention direct from the Bank of Japan this month as the Yen remains unfavourably strong for Japan.

JPY Trend: USD v JPY JPY Positive GBP v JPY JPY Positive EUR v YEN JPY Positive

Current Rates (2^nd August)

July Monthly Ranges

July proved to be a very mixed picture. Any headline news surrounding European debt, which last month focused on Greece’s second bail-out, or indeed the bargaining ahead of the raising of the US debt ceiling (to be finally passed by the senate today 2^nd August), dictated price movements. Over the month, USD, Euro and GBP have more or less traded in the same ranges seen over the last three months. Commodity based currencies as well as the CHF remain at record highs.

USD

The political uncertainty on the raising of the US budget ceiling and the possibility of a US default saw the USD weaken, more so after Euro Zone leaders reached the solution on the second Greek bailout. Having traded again towards €/$ 1.45 and £ 1.64 levels we have seen since the end of July the USD strengthen on the basis that the democrats and republicans, despite much haggling, have now agreed to raise the debt ceiling. Euro bond spreads for Spain and Portugal have again widened as we begin the new month, adding to further USD strength.

USD Trend: GBP v USD USD Neutral EUR v USD USD Positive AUD v USD-NZD v USD-USD v ZAR USD Negative USD v CAD USD Negative USD v JPY USD Negative

GBP

Sterling recovered during the month. With the market focusing predominantly on Euro Zone and US debt issues. Sterling has rallied against both but more so versus the Euro. There is till a mixed picture for the UK on economic data. As the UK government has a solid austerity plan there was a small rebound in Sterling strength versus Euro and USD. Despite this the Pound remains at record low levels versus commodity based currencies and CHF.

GBP Trends: GBP v EUR GBP Positive GBP v USD GBP Neutral GBP v AUD, CAD, ZAR GBP Negative GBP v JPY GBP Neutral GBP v Eastern Europe GBP Neutra

EUR

A second bail-out plan for Greece was agreed in principal by Euro officials. The Euro rallied briefly but a further down grade of Greece by the ratings agencies and rumours of contagion spreading to Italy and Spain is a cause for concern to investors. However, China has consistently been seen buying Euros versus the USD as they diversify from USD holdings into EURO government bonds when the Euro nears USD/EUR 1.40-1.41 levels.

EUR Trends: - EUR v GBP EUR Negative EUR v USD EUR Negative EUR v AUD, CAD, ZAR EUR Negative EUR v JPY EUR Negative

AUD, CAD, NZD, ZAR

All the above currency pairings retain their long term strength, supported by favourable interest rate differentials and high long term commodity prices as gold reached new record highs.

Commodity currency Trends:- Positive versus GBP, Positive v EUR, Positive v USD

CHF

The Swiss Franc remains a favoured currency to hold, as the Swiss economy continues to perform well despite massive increase in the CHF’s value over time. Safe haven scenario is still in-tact with uncertainty in Euro Zone and the U.S. New record highs have now been seen for the CHF versus EUR, USD and GBP.

CHF Trend: Overall Positive

JPY

The general view was that the Yen may weaken further over time as the economy remained gloomy, however comments from government officials that recent BOJ intervention may not be a solution, and fiscal verbal support from China has seen the Yen trade back to the stronger levels seen at the time of the Earthquake/Tsunami disaster.

JPY Trend: USD v JPY JPY Positive GBP v JPY JPY Neutral EUR v YEN JPY Positive

Current Rates (2^nd August)

July Monthly Ranges

June proved to be a volatile month to say the least. The re-scheduling of Greek debt and the passing in their parliament of new austerity measures saw the Euro recover from the lower levels. Global politics, particularly European made market trading conditions difficult to read. Sterling ends the month weaker on stagnant economic growth data.                                                                                                                                           

USD

Federal Reserve Chairman Bernanke confirmed U.S. economic forecasts have been downgraded for 2011. Budget deficit plans will be monitored during July/August as Obama pushes for an increase in its ceiling. Political bargaining over these plans will continue (as we have seen in Europe). Trading is expected for the time being to hold within the ranges seen last month.

USD Trend: GBP v USD USD Neutral  EUR v USD USD Neutral   AUD v USD-NZD v USD-USD v ZAR USD Negative  USD v CAD USD Negative  USD v JPY USD Neutral

GBP

The majority of data from the U.K. over the month disappointed markets. The final GDP reading for the 1^st quarter also confirmed that economic growth remained stagnant. New MPC member Broadbent shifted the balance of the Bank of England committee to 7-2 in favour of holding rates at 0.5% (previous 6-3). Market assumes rates will remain at lower levels for longer than previously expected with deflation possibilities being a concern. Sterling closes the month as fundamentals largely influence the Pounds value. One good piece of news was that Public Sector borrowing decreased more than market expectations for the previous month.

GBP Trends: GBP v EUR GBP Negative  GBP v USD GBP Neutral   GBP v AUD, CAD, ZAR GBP Negative  GBP v JPY GBP Neutral  GBP v Eastern Europe GBP Negative

EUR

June again proved to be a very aggressive month for the Euro. Prior to the Greek vote on the new austerity measures, the Euro traded as low as $ 1.4000 levels and £ 1.14+. French banks agreed to extend their exposure to Greece over a 30 year period and German banks are also expected to follow suit. Having seen the austerity measures now passed by the Greek parliament in the last 24 hours, the Euro closed the month on a firmer footing. China also voiced support for Euro Zone debt purchases during the month as the Euro Zone’s political will to support the peripheral states continues.

EUR Trend: - Euro Positive v Sterling/Yen  (neutral versus other pairings)

AUD, CAD, NZD, ZAR

Despite a correction in commodity prices where oil traded (NYMEX) from $ 110 to a low of $ 90, all pairs having seen a correction have eventually closed the month on a firmer footing. Higher interest rate differentials being the major contributor (not CAD rates however).

Commodity Currency Trends: Positive versus GBP,  Neutral  v EUR, Positive v USD

CHF

The Swiss Franc remains a favoured currency to hold, as the Swiss economy continues to perform well despite massive increase in the CHF’s value over time. Safe haven scenario is still in-tact with uncertainty in Euro Zone and U.S.  However, some technical CHF selling has been seen as we close the month, hardly surprising as the CHF has strengthened over 20% as an example against the USD in the last year.

CHF Trend: Overall Positive  

JPY

Very tight trading ranges persisted throughout the month. The general view is that the Yen may weaken further over time as the economy remains gloomy after the disaster earlier this year.

JPY Trend: USD v JPY JPY Neutral    GBP v JPY JPY Neutral    EUR v YEN JPY Negative

Current Rates (30^th June)

Monthly Ranges

For further currency information, please call John Redford (0203 326 4502) john.redford@worldwidecurrencies.com

There was a reversal in the Euro last month where it collapsed from around $ 1.4900 to sub $ 1.40. The Euro Zone sovereign debt fears returned with Greece again being in the spotlight. The Fed Reserve indicated that Q/E would be ending in June although they were reluctant to confirm on how long rates would remain low. With Oil trading below $100 (NYMEX) this supported the USD, however, the Euro clawed some of its losses back towards the end of the month as the short term `fix’ for Greece (to be announced by end of June) was confirmed by Euro officials.

USD

The USD gained nearly 7% against the ailing Euro at the start of May. Despite this, there are still concerns over the size of the US deficits and as the month ended, the USD gave back half of its gains. This was largely due to the support being propositioned to Greece by the Euro Zone and the IMF on its short term funding requirements, the details of which are due to be announced at the end of June. Last week’s U.S. GDP was also below expectations adding to USD weakness in general.

USD Trend: GBP v USD USD Negative EUR v USD USD Negative   AUD v USD-NZD v USD-USD v ZAR USD Negative  USD v CAD USD Neutral  USD v JPY USD Neutral

GBP

Industrial/Manufacturing data remains encouraging but unemployment claims increase which coincided with public sector employee redundancies. Also retail sales data remains in a downward trend as consumers are reluctant to spend. The British Chamber of Commerce lowered its growth forecast for the remainder of 2011. Sterling is currently trading mid-range with the Euro having reached € 1.1600 last week, but the weaker USD scenario has seen the Pound move back above $ 1.6500 at the end of the month.

GBP Trends: GBP v EUR GBP Neutral   GBP v USD GBP Positive   GBP v AUD, CAD, ZAR GBP Negative  GBP v JPY GBP Neutral  GBP v Eastern Europe GBP Neutral

EUR

May did prove to be a very aggressive month for the Euro. In the build up to reports on Greece potentially requiring further financial support from its European partners and IMF saw the Euro weaken 7% versus USD and 4½% versus Sterling.  In the Spanish local elections, the socialist’s party lost the majority of their seats to the conservatives increasing political instability in the country. Rumours are still rife that excess spending by these local councils under the socialists will further dampen any chances of a rebound in the Spanish economy. As mentioned earlier, we ended the month there was a recovery for Euro on weaker US GDP and confirmation that Euro/IMF officials will announce at the end of June, a financial plan to further aid Greece, albeit temporary.

EUR Trend: Medium term - Euro Positive

AUD, CAD, NZD, ZAR

The rising commodity prices and interest rate differentials have benefited AUD and CAD in particular. There are some signs that commodity prices may have stalled for the time being, comments from Canadian officials that they would prefer the USD value to be nearer to parity, current at 0.9720, could potentially result in a correction over time.

Commodity Currency Trends: Neutral versus GBP,  Neutral  v EUR, Neutral v USD

CHF

The Swiss Franc remains a favoured currency to hold. Proposed Swiss tax rules and Middle East tensions support the CHF in the medium term. A lower than expected Swiss GDP announced at the end of the month has resulted in some speculative profit taking on the Swiss Franc.

CHF Trend: Overall Positive  (neutral v Euro)

JPY

Despite negative data, the Yen gained on speculative squaring of short Yen positions. The initial `sell off’ of the Euro influenced this. As we end the month, $/yen has rebounded from the levels where the Bank of Japan stepped in to sell Yen after the disaster ($ 80.60).

JPY Trend: USD v JPY JPY Neutral    GBP v JPY JPY Neutral    EUR v YEN JPY Neutral

Current Rates (31^st March)

Monthly Ranges

USD weakness persists, as does Yen weakness. The Federal Reserve intends to keep rates low for an extended period as growth forecasts are also lowered for the USA. UK economic data mixed and the Euro surges again as ECB’s Trichet indicates further rate hikes are likely. Middle East tensions are likely to continue as conflicts worsen in Syria and Libya. Commodities rally to new highs as a result. 

USD

In the US, the Federal Reserve pledged (27/4/11) to keep interest rates low. The Q/E programme of $600 billion will come to a halt at the end of June and they do not rule out further Q/E if necessary. The USD is now at 15 month lows versus Sterling and Euro and at all time lows versus the AUD and CAD as Fed Chairman Bernanke lowered growth estimates also.

USD Trend: GBP v USD USD Negative  EUR v USD USD Negative    AUD v USD-NZD v USD-USD v ZAR USD Negative  USD v CAD USD Negative  USD v JPY USD Positive

GBP

Economic data from the UK shows stronger industrial/export growth. Despite stronger than expected `official’ retail sales data this month, the British Retail Consortium data definitely confirms weakness in this sector. Austerity measures continue to bite with consumers reluctantly spending. Medium term economic growth prospects remain clouded thus keeping the Pound under pressure against the Euro as markets expect the ECB to continue their rate hiking programme. Consumer confidence remains low in the UK. Any Sterling gains made versus commodity based currencies in March have also been given back this month. In this weaker USD environment the Pound is expected to trade higher versus the USD, but looks capped against the Euro at 1.1350.

GBP Trends: GBP v EUR GBP Negative   GBP v USD GBP Positive   GBP v AUD, CAD, ZAR GBP Negative  GBP v JPY GBP Positive   GBP v Eastern Europe GBP Negative

EUR

The Euro traded above €/$ 1.46 and has made further gains since yesterdays FOMC meeting and press conference. Euro sovereign debt issues have taken a back seat again despite a further downgrading of Greece. A second round of hawkish comments from ECB’s Trichet this month results in more aggressive buying of Euros. One would now assume that Euro Zone inflation is more of a concern for the ECB compared to those views of the Fed Reserve and Bank of England. Two further rate hikes of 0.25% are expected by the year end.

EUR Trend: Overall - Euro Positive

AUD, CAD, NZD, ZAR

Rising commodity prices and interest rate differentials benefit AUD and CAD in particular.

Commodity Currency Trends: Positive versus GBP,  Neutral  v EUR, Positive v USD

CHF

Last months weakness in the CHF last month, influenced by Yen selling has come to a halt. Newly proposed Swiss tax rules and Middle East tensions support the CHF in the medium term.

CHF Trend: Overall Positive  (neutral v Euro)

JPY

After the disaster in Japan, aggressive negative growth is anticipated. The Bank of Japan as expected added liquidity for the nations re-building costs. We anticipate further Yen weakness.

JPY Trend: USD v JPY JPY Negative    GBP v JPY JPY Negative    EUR v YEN JPY Negative

Current Rates (31^st March)

Monthly Ranges

Middle East politics and the Japanese earthquake led to much volatility in the currency markets. Despite a sudden surge in the Yens value on anticipation of repatriation to pay for the costs of rebuilding, the Bank of Japan and G7 central banks intervened and drove the Yen weaker. This intervention weakened the Yen significantly.                                                                                                                                               

USD

In the US, higher oil prices are far more likely to slow economic growth than to generate inflationary pressures. The level of US debt is a concern should the Mideast problems continue in the medium term. However, some Federal Reserve officials have indicated that inflation could become a problem and the tone of the March FOMC statement and overall stance of officials' remarks in recent days appears to be aimed more at signalling that the door is set to close on asset purchases at the end of the second quarter. The USD remains in its medium term down trend (except versus Yen), but there are some technical signals that this may have stalled for the time being.

USD Trend: GBP v USD USD Negative  EUR v USD USD Negative    AUD v USD-NZD v USD-USD v ZAR USD Negative  USD v CAD USD Negative  USD v JPY USD Positive

GBP

Economic data from the UK shows stronger industrial/export growth, but weaker retail sales. As austerity measures bite, consumers are reluctant to spend and the medium term economic growth prospects are clouded keeping the Pound under pressure against the Euro as markets expect the ECB to commence a rate hiking programme.

GBP Trends: GBP v EUR GBP Negative   GBP v USD GBP Positive   GBP v AUD, CAD, ZAR GBP Neutral  GBP v JPY GBP Positive   GBP v Eastern Europe GBP Negative

EUR

The Euro traded back above €/$ 1.3900 and has since grinded higher. Euro sovereign debt issues have taken a back seat for the time being as Euro officials have agreed to increase the size of the `bail out’ fund. Hawkish comments from ECB’s Trichet and Euro area inflation which was above the consensus forecasts, results in further demand for the Euro.  A rate hike of 0.25% is expected in April by the ECB.

EUR Trend: Overall - Euro Positive

AUD, CAD, NZD, ZAR

Rising commodity prices and interest rate differentials benefit AUD in particular. NZD is a little weaker post earthquake.

Commodity Currency Trends: Positive versus GBP,  Neutral  v EUR, Positive v USD

CHF

Despite the Middle East tensions, the CHF has seen an aggressive correction influenced by the weakening Yen and investor confidence in global stocks.

CHF Trend: Overall Negative – Positive v GBP

JPY

The earthquake in Japan saw intervention by the Bank of Japan and G7 central banks to halt the rise of the Yen. Assumptions of huge repatriation of the currency were short lived as a result. The Yen has since weakened approximately 8% against a basket of currencies including USD. EUR and GBP.

JPY Trend: USD v JPY JPY Negative    GBP v JPY JPY Negative    EUR v YEN JPY Negative

Current Rates (31^st March)

Monthly Ranges

David Tucker, CEO of WWC, stated that “Authorisation with the FSA is a significant step for our business, as it is imperative that companies such as ours are properly regulated and that our working practices are controlled and monitored”. Commenting on the sector as a whole, David went onto say “There have been examples of poor working practices in our industry that hopefully this requirement by the FSA to be authorised by the end of April, at the very latest, will address. It is important to protect not only the client’s interests but also the more professional companies operating in this sector, like WWC”.

WWC has had a very profitable 2010 as it continues to build upon its success in foreign exchange and continues to grow the company. The annual turnover of the company has almost trebled over the past two years, as has the gross profit. With costs tightly under control now, they have employed an additional 10 people over the past two months and are planning further growth in the second half of the year, once they have moved into their new and larger office in the City next month. “It is essential that you continually review your services and listen to your clients needs. We have found that the major banks are charging more for foreign exchange and not providing a service to clients, which is great for a company like ours” David Tucker added “to this end we continue to improve our processes and intend to launch a number of innovative products later in the year”. WWC believe that having the right team of people providing the best possible level of service is key to achieving their objective of becoming the pre eminent company in this sector.

For more information on Worldwide Currencies please contact either David Tucker or Arran Duke on 020 3326 4444.

Middle East tensions in Egypt as well as other states and the more recent spread to Libya took equity markets off highs earlier last week, as the USD continues to remain on its downward trend. Markets remain alert and the threat of further escalation would be bad news for the expected global economic rebound that had been expected. Oil prices continue to rally and hold around the $ 100 level.  

USD

In the US, higher oil prices are far more likely to slow economic growth than to generate inflationary pressures. The level of U.S. debt is a concern should the Mideast problems continue in the medium term, it is expected that the USD will trade on the weaker side both technically and fundamentally.

USD Trend: GBP v USD USD Negative  EUR v USD USD Negative    AUD v USD-NZD v USD-USD v ZAR USD Negative  USD v CAD USD Negative  USD v JPY USD Neutral

GBP

Data from last Friday (25^th February) unexpectedly showed the UK economy contracted by 0.6 percent in the fourth quarter, more than previously estimated, which highlighted its precarious state, just as tough austerity measures start to bite. Interest rates are likely to be raised later than previously thought. Short term, market data has to be monitored. Critical level for the Pound v Euro is at € 1.1600. A weaker USD trend normally results in a weaker Pound versus the Euro. For further gains versus the USD we would need to break above the $ 1.6300 level.

GBP Trends: GBP v EUR GBP Negative   GBP v USD GBP Positive   GBP v AUD, CAD, ZAR GBP Neutral  GBP v JPY GBP Positive   GBP v Eastern Europe GBP Neutral

EUR

The Euro is holding above the €/$ 1.3600 level. Euro sovereign debt issues have taken a back seat for the time being, although Portugal is still under threat as borrowing costs remain above their targets. Overall, European manufacturing strength as well as `hawkish’ talk from Euro officials keeps the Euro well supported. The release of the new Euro Zone stress test criteria on Wednesday (2^nd March) will however be closely watched by the market. Do not rule out a correction should market interpret as being too weak.

EUR Trend: Overall - Euro Positive

AUD, CAD, NZD, ZAR

The recent weakening in these commodity related currencies appeared to have stalled.  Commodity price rises linked to the problems in the Middle East this month, and favourable interest rate differentials have seen some demand for these currencies. A weakening however of the NZD due to recent earthquake in Christchurch has proved to also be short lived.

Commodity Currency Trends: Neutral versus GBP,  Neutral  v EUR, Positive v USD

CHF

Middle East turmoil has resulted in a sudden strengthening of CHF. The CHF has gained between 3% & 4% against a basket of currencies during the last few weeks, although technical analysts are still calling the CHF grossly `overvalued’. For the time being, CHF safe haven status cannot be ignored.

CHF Trend: Overall Positive

JPY

The market is trading within its recent ranges seen in the last quarter with a negative trend against European Currencies.

JPY Trend: USD v JPY Neutral    GBP v JPY JPY Negative    EUR v YEN JPY Negative

Current Rates (28^th February)

Monthly Ranges

The USD rally seen towards the back end of 2010 and the start of the New Year has stalled. Repeated comments from Chinese and Japanese officials in supporting Euro Zone debt purchases set the precedent for a Euro rally in January. Stock markets have held onto their gains and risk trades have been placed, thus an additional factor for a weaker USD versus Euro scenario. Surprise weaker GDP data from the U.K. stalls any good feel factor in the U.K. Commodity based currencies now in a corrective weakening phase (AUD, NZD, ZAR, CAD$).                                                                                                                                               

USD

Economic data from the U.S. was mixed in December. In President Obama’s State of the Union speech, he highlighted the need for economic initiative as well as tackling the deficit domestically and externally (China). USD remains weak versus the Euro in particular. The pace of the Yuan/Renminbi revaluation will remain a talking point between U.S. and China during 2011. U.S. manufacturing orders appear to be on the increase, a good sign going forward. The USD saw some demand on Friday/Monday 28^th and 31^st January over political demonstrations/tensions in Egypt, this proved to be short lived.

USD Trend: GBP v USD USD Negative  EUR v USD USD Negative    AUD v USD-NZD v USD-USD v ZAR USD Neutral  USD v CAD USD Negative  USD v JPY USD Neutral

GBP

Sterling v Euro weakness persists. Q4 GDP data was far weaker than expected (-0.5%) even taking into consideration the bad weather experienced. Public sector job losses are now expected. Data will be closely monitored going forward. Despite the fact that two MPC members are now calling for a rate hike, this additional vote in favour (MPC minutes released 26/1/11) was pre GDP data. Also bank lending in December was weaker than expected, a continuation of which may keep house prices weak. GBP/USD looks range bound $ 1.57-1.60 and a break below € 1.1600, indicates a potential target of € 1.13+

GBP Trends: GBP v EUR GBP Negative   GBP v USD GBP Positive   GBP v AUD, CAD, ZAR GBP Positive   GBP v JPY GBP Negative    GBP v Eastern Europe GBP Negative

EUR

The Euro is now holding above the €/$ 1.3600 level. Chinese and Japanese support of Euro Zone debt saw a steady rally for the Euro from the lows of around €/$ 1.2900 in December. Sovereign debt issues are not resolved even though the renamed Euro `bail out’ bond was a success and also oversubscribed. Markets are expected to remain fragile again in 2011. The IMF having reminded us that failure to address Euro Zone deficit issues could result in return to recession (24/1/11). No headline news re:  sovereign debt, the Euro benefits for the time being.

EUR Trend: Overall - Euro Positive

AUD, CAD, NZD, ZAR

As mentioned last month, the commodity based currencies have now seen a correction, these influenced by weaker gold and oil prices. However oil prices have rallied from last week, over the Egyptian situation. Any major weakness in these currencies are still viewed as buying opportunities.

Commodity Currency Trends: All Negative v Europe, Neutral v USD (CAD$ Positive v USD)

CHF

The Swiss Franc is weaker this month, influenced by unwinding and correction of commodity based currencies.

CHF Trend: Overall Negative

JPY

Overall the market is trading within its recent ranges seen in the last quarter with a negative trend against European Currencies.

JPY Trend: USD v JPY Neutral    GBP v JPY JPY Negative    EUR v YEN JPY Negative

31 Dec 2010

Monthly Ranges

The November USD rally versus European currencies in the month of November held and we saw further gains for the USD against the Pound from $ 1.60+ levels to the levels of below $ 1.5400 in December.  Commodity prices gained (oil and gold above $ 90 and $ 1400 respectively) and the AUD led the way for further gains for most of the commodity based currencies including ZAR, NZD and CAD$. China raised rates again in an attempt to slow inflation, however this did not stop commodities rallying (oil in particular) as Europe and the USA saw some adverse weather conditions.  Markets will be watching for any signs of further Q/E from the Federal Reserve in 2011 as well as the support for European debt purchases (particularly Portugal & Spain) already voiced by China, this could lead to Euro gains in the new year.

USD

There are signs the trade gap between the U.S. and China is narrowing. December showed mixed economic data, but overall there are strong signals that U.S. manufacturing is improving. Job data remains negative as does the housing data, although yesterdays U.S. weekly job data showed unexpected gains. The USD is holding firm against only European currencies.

USD Trend: GBP v USD USD Positive   EUR v USD USD Positive    AUD v USD-NZD v USD-USD v ZAR USD Negative   USD v CAD Neutral   USD v JPY Neutral

GBP

The Pound came under pressure this month. A combination of weaker housing data, higher than expected inflation, and government coalition problems, led the Pound to `top out’ against the Euro and USD. Prior to the Christmas holidays UK Public borrowing was also surprisingly higher than expected adding to market concerns as to the speed of any U.K. economic recovery ahead of public sector job losses in 2011. The Pound at very weak levels against the AUD, the commodity based currencies look very strong as we end the year.

GBP Trends: GBP v EUR Neutral   GBP v USD Negative   GBP v AUD, CAD, ZAR Negative   GBP v JPY Neutral     GBP v Eastern Europe Negative

EUR

The Euro failed to rally above the €/$ 1.3600 strong resistance level and a further downgrade of Ireland and Portugal resulted in the Euro trading back through the €/$ 1.3300 (Monthly low 1.2971). We close the month above the pivotal level of $/$ 1.3300 as Estonia now joins the `Euro club’. European bond spreads will be closely monitored going forward as well as Chinas comments noted in the above monthly summary. Both the Euro and Pound remain weak versus commodity based currencies.

EUR Trend: Overall Negative (neutral v GBP)

AUD, CAD, NZD, ZAR

Interest rate differentials and higher commodity prices keep the AUD, CAD, NZD well supported on any major dips.  CAD is reluctant to rally at the same pace, due to interest rates being at 1%. From the beginning of the month AUD. NZD and ZAR have all gained aggressively against the EUR, USD and GBP (approximately 7% versus GBP).

Commodity Currency Trends: All positive

CHF

The positive economy keeps the CHF strong, as well as its safe haven status.

CHF Trend: Overall Positive

JPY

The intervention (buying USD’s) in October by the Bank of Japan has done little to weaken the Yen against any major currencies, although showing technical signs of forming a `base’ for USD/YEN (USD Positive).   Deflation is still a cause for concern in Japan. Overall the market is trading within its recent ranges seen in the last quarter with a positive trend against European Currencies.

JPY Trend: USD v JPY Neutral    GBP v JPY JPY Positive     EUR v YEN JPY Positive

31 Dec 2010

Monthly Ranges

November proved to be a very volatile month.  The USD downward trend reversed and turned positive after the expected announcement of Quantitative Easing (2nd phase) by the U.S. Federal Reserve.  Within 24 hours of the announcement, the difficulties faced by the Irish Sovereign debt situation came to light, and we have now seen a two month low for the EUR v USD (a USD rise of nearly 9% from when the Euro traded at its highs of 1.4280).  Portugal and Spain are now on the markets watch list.  China’s decision to raise interest rates during the month to stem inflation has seen commodity based currencies correct to the downside having made record highs.  Events last week in Korea led to further USD purchases.

USD

The announcement by the Federal Reserve of USD600bn of asset purchases was in some minds a little above expectation, and the slower pace of purchases, spread out until 2^nd quarter 2011 at USD75bn a month, is also seen as slightly on the disappointing side compared to earlier speculation.  However, Fed Chairman Bernanke's reassurance in a Washington Post article that the measures will be effective in restoring confidence and boosting asset prices (stock markets) is likely to help maintain this confidence for the time being.  Euro Sovereign debt and events in Korea gives the USD further support.

USD Trend: Overall Positive

GBP

GBP/USD broke higher as the Bank of England kept any Quantitative Easing on hold.  Sterling rallied initially to nearly 1.6300, but the Euro’s sell off has led to a weaker Pound against the USD is now below $ 1.5700 (last major support).  Sterling gained against the ailing Euro to break 1.1850 on Friday 26^th.  UK inflation still appears to be above the Bank of England’s target, however, housing concerns will undoubtedly keep rates low for some time yet.  More jobs have been created and industrial orders are still showing signs of improvement.

GBP Trends: GBP v EUR Positive  GBP v USD Negative  GBP v AUD, CAD, ZAR Neutral  GBP v JPY Neutral     GBP v Eastern Europe Positive

EUR

The Irish bail-out has been well documented.  This is just another blow to the Euro, as Portugal and Spain are now on the watch list.  The cost of funding Greek, Portuguese, Spanish and Irish debt all with slow economic growth expected, will surely re-surface in 2011. There is market talk of a two tier Euro, but all speculation.  Technical levels have to be respected and, as a benchmark, should we hold below $ 1.3000, expect further Euro losses across the board (now seen in last 12 hrs).  European bond spreads will be closely monitored going forward.

EUR Trend: Overall Negative

AUD, CAD, NZD, ZAR

The decision by the RBA to raise rates (now 4.75%) has led to the AUD/USD to trade briefly above parity.  Interest rate differentials and higher commodity prices keep the AUD, CAD, NZD well supported on any major dips.  CAD is reluctant to rally at the same pace, due to interest rates at 1%.  The stronger USD though has seen short term trends reverse for the time being (see above).

CHF

The Swiss Franc remains well supported with concerns over Europe and Korea, maintaining its safe haven status.

CHF Trend: Overall Positive (but Neutral v USD)

JPY

The intervention (buying USD’s) in October by the Bank of Japan has done little to weaken the Yen against any major currencies, although showing technical signs of forming a technical bottom for USD/YEN (USD Positive).   Deflation is still a cause for concern in Japan.

JPY Trend: USD v JPY Positive    GBP v JPY Neutral     EUR v YEN Negative

30 November 2010

Monthly Ranges

For further currency information, please call John Redford (0203 326 4502) john.redford@worldwidecurrencies.com

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