The Currency Converter

Archive for 2010

Swiss Franc Exchange Rate: The Swiss Franc went sideways against its safe haven counterparts

Thursday, December 9th, 2010

The Swiss Franc went sideways against its safe haven counterparts the U.S dollar and Japanese Yen but made gains against the weaker euro of 0.2% in London trading.

The trustee representing victims of the US financier Bernie Madoff’s fraudulent operations has increased the amount it is seeking from the Swiss bank UBS. Irving Picard filed a $2bn (£1.3bn) lawsuit against UBS in November, accusing it of lending “an aura of legitimacy” to funds run by Madoff, whose so-called Ponzi scheme led to clients losing billions of dollars. He has now outlined 26 additional counts of financial fraud and misconduct against the bank, bringing the total damages sought to $2.5bn. UBS denied the allegations, saying they are without merit. The case against HSBC rests on allegations that it failed to act on signals that should have prompted it to stop channeling funds to Madoff’s operations.
HSBC and JP Morgan Chase also deny any wrongdoing.

Written by James Rowe


US Dollar Rate News: The Dollars recent rally appears to have run out of steam

Thursday, December 9th, 2010

There is little in terms of fresh updates on either the eurozone or US economies today but given last Friday’s disappointing non-farm payrolls report, markets will be keeping a close eye on weekly jobless claims.

The dollar’s recent rally appears to have run out of steam in tandem with a pause in the sharp uptrend in US Treasury yields, which had been a major driver of dollar gains earlier this week. A view is emerging that the sell-off in treasuries, on raised growth expectations after the deal struck between Obama and Republicans to extend tax cuts, may have been overdone.

The dollar is suffering from improved risk appetite following overnight news of surprisingly strong Australian employment data. This saw the Australian Dollar jump by nearly 1% at one stage. The New Zealand dollar, though, is lagging following a surprisingly dovish statement from the Reserve Bank of New Zealand following its meeting at which rates were left on hold at 3.0%, as had been widely expected.

Against the dollar, sterling pushed higher, rising 0.2 percent to $1.5787 after trading lower earlier in the session, with traders citing real money and sovereign demand for the UK currency. Gains were limited, however, as the dollar benefited broadly from a jump in U.S. bond yields after a proposed extension in U.S. tax cuts fuelled concerns about inflation.

The dollar later rose against most other currencies yesterday on the back of a spike in U.S. Treasury yields causing funds to flock in the direction of the Greenback. Also a proposed extension in U.S. tax cuts raised growth expectations for the U.S. economy and pushed U.S. Treasury yields to their highest level in at least six months as they fuelled fears about inflation and Washington’s control of the budget deficit. That also drove 10-year gilt yields to four-month highs although gilts underperformed U.S. Treasuries, tempering sterling gains.

Written by James Rowe


Australian Dollar News: The Aussie was supported by domestic data showing a healthy rise in job advertisements

Tuesday, December 7th, 2010

The Australian dollar edged back today as a three session rally drew some profit taking, though it held most of its recent gains helped by expectations of extended stimulus in the Unites States.

The Aussie was supported by domestic data showing a healthy 2.9% rise in job advertisements in November which augured well for an upbeat reading from the official employment report due on Thursday. Analysts are looking for a solid rise of around 19,000 in employment and a drop in the jobless rate back down to 5.2%. Such a result would help offset a run of softer data recently and keep the Reserve Bank on inflation watch.

“Jobs should remain an ongoing key support to household income – which coupled with an on-hold RBA over coming months – should help consumption to pick-up ahead, after some patchiness recently,” said George Tharenou, an economist at UBS.

The Reserve Bank of Australia has, as expected, held interest rates unchanged at 4.75% and Governor Glenn Stevens said the market was reasonable in pricing in the next move around mid 2011. With the next interest rate rise in Australia likely to be months away and the markets expecting a slowdown in the rate of growth in the Chinese economy to control inflationary pressures sapping demand for Australian raw materials. The RBA forecasts Australia’s economy to expand 3.5% in 2011 from the average 2.7% in the first three quarters of this year with inflation and employment seen picking up in line with economic growth.

“The terms of trade are at their highest level since the early 1950s, and national income is growing strongly as a result,” Stevens said.

The RBA chief said private investment had recently started to pick up in response to high levels of commodity prices, while spending and borrowing in the housing sector continued to show signs of caution, leading to a “noticeable increase” in the saving rate. The assessments are broadly in line with Stevens’ testimony to the House Representatives’ economics committee last month, where he said it was “reasonable” to assume no further rate hikes will be imminent from the central bank for some time. The RBA has been one of the most aggressive of the major central banks in raising interest rates following the global downturn. The nation’s economy has enjoyed a robust rebound led by voracious demand for its abundant mineral resources from China and India.

Written by Tony Redondo


US Dollar Exchange Rate News: The US economy grew at a modest annual rate

Tuesday, December 7th, 2010

In a rare television interview, Federal Reserve Chairman Ben Bernanke said that the Fed could end up buying more than the $600 billion in US government bonds it has committed to purchase if the US economy fails to respond or unemployment stays too high. But he also did not rule out stopping short of the total.

He added that the Fed will regularly review the policy and could adjust the amount of buying up or down depending on the economy’s path. Bernanke stated that the Fed’s actions are aimed at supporting what is still a fragile economic recovery, dismissing critics who argue the policy will lead to future inflation.

“This fear of inflation I think is way overstated,” Bernanke said in the interview aired on Sunday. “What we’re doing is lowering interest rates by buying Treasury securities,” he said, “and by lowering interest rates, we hope to stimulate the economy to grow faster. The trick is to find the appropriate moment when to begin to unwind this policy. And that’s what we’re going to do.”

Bernanke said it would take four to five years for the country’s unemployment rate, which rose to 9.8% in November to come down to what he called more “normal” levels of around 5% to 6%.

The US economy grew at a modest 2.5% annual rate in the three months ending September 2010 and more vigorous growth is needed to bring down unemployment. The interview follows Friday’s worse-than-expected US employment report. The increase in the unemployment rate to 9.8% has fuelled speculation that there could be further QE or QE3, which seems a little premature given the Fed is only 1 month into QE2.

Written by Tony Redondo


US Dollar: A likely negative forecast for the Dollar exchange rate

Friday, December 3rd, 2010

The spotlight that has been shining brightly over the Eurozone this week will shift onto the US this afternoon as the release of November’s non-farm payrolls report is announced. The report is forecast to show that payroll was up 140’000 over the month; however this is not expected to make a real difference to the overall unemployment rate which is expected to remain unchanged at 9.6%. After racking up strong earnings growth in 2010, major U.S. manufacturers are expect to set the stage for a slower-paced 2011 when they meet with analysts and investors to lay out their expectations for the coming year. Among others, General Electric, United Technologies and 3M are all set to provide 2011 forecasts shortly. Profit margins across the sector swelled this year as companies that cut costs to the bone during the brutal recession experienced a rebound in sales that helped the Standard & Poor’s capital goods industry index to rise about 14%, more than twice the gains of the broader US Stock market. Analysts expect 2011 profits to rise next year, but not at the same pace as 2010. It is likely that the forecast for the dollar will be negative as the slow recovery and difficult sets of fundamental undermine the currency during these difficult times.


Janapese Yen: A weaker Yen has helped Japanese shares

Friday, December 3rd, 2010

Weaker Yen this week has helped Japanese shares prevent sharp losses but the upward momentum for USD/JPY has to be supported by some good news from Europe, suggested by fundamentals. USD/JPY tends to fall further during the European trading sessions and the market is preparing itself for more bad news from Portugal or Spain, likely in the coming days. The pairing may only have a brief stop near 83.75 and looks good top stay form around this price throughout today. A strong showing of economic data could rally in favour of the dollar and push rates towards the 84.70 resistance level. This could be a long time coming, however as we await the non-farm payrolls in the US later today.


Swiss Franc Rate News: The Swiss Franc lost nearly 1% to the Euro exchange rate

Thursday, December 2nd, 2010

UBS is expanding commodities coverage to include investor-led flow trading in agriculture, base metals and energy, the Swiss bank said on Wednesday. UBS which suffered heavy writedowns during the financial crisis and had to be bailed out by the Swiss government was already active in precious metals. In January 2009 the wealth management giant took the radical step of selling its base metals, oil, and U.S. power and gas business to Barclays. It said at the time it would exit most commodities businesses, including agricultural goods and base metals. It held on to precious metals, index and exchange-traded commodities. Jean Bourlot, global head of commodities at UBS Investment Bank, heads a team of around 40, which he plans to double within two years. “UBS has always maintained its core strengths in commodities, like our market-leading indices and precious metals offerings — in that sense we never left,” Bourlot said in a statement. “Quite simply our expansion into flow trading, in areas such as agriculture, will leverage and complement what already exists inside UBS,” he added. The Swiss Franc lost nearly 1% to the EUR but traded sideways against its safe haven counterparts the Japanese Yen and US Dollar.

Written by James Rowe


US Dollar Rate News: Unemployment data weakened the Dollar throughout the day

Thursday, December 2nd, 2010

In the Us Non-farm productivity and poorer than expected unemployment data weakened the Dollar throughout the day’s trading. A commission set up by president Obama says US debt is the greatest threat to security, and urges sweeping spending cuts and tax reform. The National Commission on Fiscal Responsibility and Reform laid out an ambitious plan to cut the US budget deficit to 2.3pc of gross domestic product by 2015 from 9pc this year. The commission, which was appointed by President Obama, argues that savings need to be found in both defence and non-defence spending, as well as healthcare programmes such as Medicaid. “Our challenge is clear and inescapable: America cannot be great if we go broke,” the report, titled ‘The Moment of Truth’, said. Americans are counting on Congress to “put politics aside, pull together not pull apart, and agree on a plan to live within our means and make America strong for the long haul.”
Tomorrows Non-farm payrolls could see the further volatility depending upon the outcome.

Written by James Rowe


Currency Update: The strength of the Japanese Yen

Friday, November 26th, 2010

Japan’s strong yen is not helping the country as exports are becoming more expensive for overseas consumers. Weaker exports could now contribute to reduced consumer demand. Consumer prices fell for the 20th month in a row in October which is further evidence that the government is struggling to overcome the deflation that is undermining economic recovery. As opposed to the same tim last year, official figures showed that core consumer prices fell 0.6%. Although this was seen as a improvement on the 1.1% price fall seen in September this year, the continued threat of deflation, which is particularly damaging to economic growth looms.

Focus will no-doubt shift to the Bank of Japan who now face continued pressure to do more to fight deflation, with both ruling and opposition lawmakers calling for legislation that would give politicians more control over monetary policy. Some members of the BOJ said falling prices may hold back any long-term inflation expectations of companies and households with the view being that as a strong Yen, which continues to benefit just like the US Dollar as a safe haven asset, will make imports cheaper the fact that exports being more expensive is a balance that warrants caution.
The ever developing problem with North and South Korea will be carefully monitored by the markets, and we will have more on this when we get it.

Written by Luke Trevail


Currency News: Pound Sterling versus The US Dollar

Friday, November 26th, 2010

The US Dollar is basking in it’s safe haven status this morning after risk averse investors piled their money into the Greenback. With the Thanksgiving Holiday yesterday there is little in the way of any significant news coming out of the States as trading was limited. With questions still surrounding the Euro debt crisis the dollar did however benefit from the market’s hatred of uncertainty and we saw the two month highs versus the euro as it dropped down to below $1.33 and also saw gains versus the pound reaching an overnight 6 high of 1.5688 with both the US Dollar and the Japanese Yen strengthening while investors wait for any significant market change of direction.

Written by Luke Trevail