Exchange Rates and Market Commentary [23/09/2011]

Exchange Rates and Market Commentary [23/09/2011]

Good morning. These are turbulent times for the global economy and equity markets around the world are on the receiving end. Cash is king and the greenback rules! Those who argued for an alternate global reserve currency after the US was downgraded may just have to wait a little longer. The Chinese may not be particularly happy as it will take some time before Yuan gains prominence since investors are favoring nothing but USD at the moment. The Euro rose after the G20’s pledge to preserve market stability. However, the gain may prove short-lived as no definitive measure has been announced to contain the Eurozone debt crisis.

The Sterling continued its southward journey yesterday after UK factory export order numbers turned out weaker than expected. Analysts’ are not ruling out Bank of England lowering the interest rate further from the present historical low of 0.5%. This can raise the woes of the middle class further by stoking inflation. Sunday’s roast by the fireplace may be at risk! The government’s objective of higher credit off-take by businesses may not succeed either since banks are wary of lending. Not the least because they are sitting on cash pile, but they are not sure the extent of shock they will have to absorb if their Greek bond assets become dud overnight. Housing purchase data for the month of August is expected today.

CURRENCY RATE OVERVIEW

GBP/EURO – 1.1395
GBP/US$ – 1.5420
GBP/CHF – 1.3930
GBP/CAN$ – 1.5795
GBP/AUS$ – 1.5694
GBP/ZAR – 12.7240
GBP/JPY – 117.65
GBP/HKD – 12.0280
GBP/NZD – 1.9635
GBP/SEK – 10.5295
GBP/AED – 5.665

If your currency pairing is not listed above or you want to make an international money transfer, check out our comparison tables at www.mycurrencytransfer.com

EURO: The Euro was down to its lowest level against USD since February yesterday and was hammered by a sliding equity market and weak French manufacturing PMI data. The EUR/USD pair hit 1.3385 though it had rallied for a short while over rumours that the EU will recapitalize 16 European banks and the US Fed may lower interest rates on the EUR/USD swap credit line. Sterling also gained over the single currency yesterday and closed at 1.1415.

USD: The greenback is ruling the market now as investors become more and more risk averse and a greater number of asset classes show signs of distress. GBP/USD pair hit its lowest since September 2010 to 1.5327. The lower-than-expected UK CBI data on manufacturing orders didn’t help the Cable’s cause either. The GBP made some gains overnight and the GBP/USD pair opened at 1.5460 this morning.

Elsewhere the AUD and NZD were badly battered yesterday. The AUD/USD and NZD/USD pairs sank to multi-month low of 0.9738 and 0.7753 respectively.

Have a great weekend.

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