Exchange Rate chestnut
May 16th 2003, 12:02 pm
#1
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Thread Starter
Joined: May 2002
Location: Adelaide
Posts: 93
Exchange Rate chestnut
I appreciate that a little knowledge is dangerous, however, I have taken a look at the 2 year Aus$/£ chart and the trend does not appear very good.
I am no expert but it does appear that the long term trend line is about to be broken and there is no support below it. This could indicate a lot of downside to come.
Now, looking at heading out in October I am considering a currency option to at least guarantee the current exchange rate. Has anybody else had experience of using this kind of service? I am aware of the risks but it does seem that the downside risk is far greater than the upside. But even if the rate does rise during that period at least I know exactly how much to bank on taking.
Oh..YIPPEE got the visa's today. Feels good don't it.
Cheers
Blegs
I am no expert but it does appear that the long term trend line is about to be broken and there is no support below it. This could indicate a lot of downside to come.
Now, looking at heading out in October I am considering a currency option to at least guarantee the current exchange rate. Has anybody else had experience of using this kind of service? I am aware of the risks but it does seem that the downside risk is far greater than the upside. But even if the rate does rise during that period at least I know exactly how much to bank on taking.
Oh..YIPPEE got the visa's today. Feels good don't it.
Cheers
Blegs
May 16th 2003, 12:26 pm
#2
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Joined: Apr 2003
Posts: 551
Congrats on getting your visa.
Best wishes for the future
Best wishes for the future
May 16th 2003, 4:07 pm
#3
Banned
Joined: Aug 2002
Posts: 7,613
Re: Exchange Rate chestnut
Originally posted by bleggy
I appreciate that a little knowledge is dangerous, however, I have taken a look at the 2 year Aus$/£ chart and the trend does not appear very good.
I am no expert but it does appear that the long term trend line is about to be broken and there is no support below it. This could indicate a lot of downside to come.
Now, looking at heading out in October I am considering a currency option to at least guarantee the current exchange rate. Has anybody else had experience of using this kind of service? I am aware of the risks but it does seem that the downside risk is far greater than the upside. But even if the rate does rise during that period at least I know exactly how much to bank on taking.
Oh..YIPPEE got the visa's today. Feels good don't it.
Cheers
Blegs
I appreciate that a little knowledge is dangerous, however, I have taken a look at the 2 year Aus$/£ chart and the trend does not appear very good.
I am no expert but it does appear that the long term trend line is about to be broken and there is no support below it. This could indicate a lot of downside to come.
Now, looking at heading out in October I am considering a currency option to at least guarantee the current exchange rate. Has anybody else had experience of using this kind of service? I am aware of the risks but it does seem that the downside risk is far greater than the upside. But even if the rate does rise during that period at least I know exactly how much to bank on taking.
Oh..YIPPEE got the visa's today. Feels good don't it.
Cheers
Blegs
Cheers - Don
May 16th 2003, 6:05 pm
#4
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Joined: Dec 2002
Location: United Kingdom.
Posts: 503
Re: Exchange Rate chestnut
Originally posted by pleasancefamily
Yep, you get what it says on the packet, ie you get the rate they say, pay 10% now, rest in normally 3 months or so, you won't benefit from improvement in rate over the next period or get a heart attack over a deterioration either.
Cheers - Don
Yep, you get what it says on the packet, ie you get the rate they say, pay 10% now, rest in normally 3 months or so, you won't benefit from improvement in rate over the next period or get a heart attack over a deterioration either.
Cheers - Don
Yep, right about the heart attack ...
And it's gone up 4 cents, unreal gonna have to catch this on the glitch,
You were right about the G Brown Euro
May 16th 2003, 6:22 pm
#5
Banned
Joined: Aug 2002
Posts: 7,613
Re: Exchange Rate chestnut
Originally posted by scoobydooathome
Hi Don,
Yep, right about the heart attack ...
And it's gone up 4 cents, unreal gonna have to catch this on the glitch,
You were right about the G Brown Euro
Hi Don,
Yep, right about the heart attack ...
And it's gone up 4 cents, unreal gonna have to catch this on the glitch,
You were right about the G Brown Euro
After range-trading early in the European session, the greenback began sliding across the board.
Against the Canadian dollar, it fell to its weakest in six years at C$1.3625. The Australian dollar rose to a three-year high at US$0.6519 and the euro rallied a cent to a high of $1.1558, within sight on Monday's four-year high at $1.1623.
The foreign exchange markets appear to be going through one of their occasional regime changes. But if not plumping for the dollar, what are the alternatives?
Strategists said there was no one reason to explain the dollar's renewed weakness, but noted that although it had steadied this week on position-squaring, sentiment towards the currency had remained bearish.
"People had a good run-up on the euro, they’ve taken good profits, but they’re scared of missing the next leg up,� said Paul Bednarczyk, currencies strategist at 4Cast economic consultancy.
Inflation numbers from the US did little to help. The consumer price index fell 0.3 per cent on the month, more than had been expected.
"CPI hasn’t been a significant market mover for the past couple of years, but following the Fed’s comments, the new fear for the economy is now deflation, and weaker numbers weren’t beneficial to the dollar outlook,� said Kamal Sharma, currencies strategist at Commerzbank.
After its last policy meeting, the Federal Reserve's statement referred to the "minor" risk of "an unwelcome substantial fall in inflation," from which strategists inferred the Fed's tacit approval for a weaker dollar with its consequent inflationary pressure.
Even a far stronger reading of consumer confidence failed to lift the dollar. The |University of Michigan's preliminary May index jumped to 93.2 from 86 in April - a far better number than economists had expected.
Mr Sharma said while the headline number was strong, the breakdown was not so positive for the US economy.
"All the gains came in the future expectations component, not the current, which suggests that current factors like the weak labour market are, and will, weigh on sentiment and ultimately consumer spending,� he added.
Against the yen , the dollar stood at Y116.0, having fallen to Y115.33 on Thursday, matching last July's low in the process.
Speculative dollar selling against the yen pushed the US currency to those levels on Thursday before a very sharp rebound back over Y116. The speed of the dollar's bounce, said traders, indicated the Bank of Japan was intervening once more.
Although the BoJ has made no comment about intervention, market participants believe the weakness of the dollar has led the bank to resume the covert interventions it undertook in the first three months of the year.
Strategists at UBS Warburg and Citigroup said the BoJ's actions would put a floor under the dollar's recent slide against the yen.
"The fact that the BoJ remains willing to intervene heavily even ahead of the politically sensitive G7 finance ministers' meeting is testament to the continued strong Japanese appetite for intervention," said Shahab Jalinoos, strategist at UBS Warburg, which forecasts Y118 for the pair in three months time.
"Note that the continued underperformance of Japanese asset markets, especially equities, continue to signal that the yen is sharply overvalued at current levels," said Steve Saywell, senior currencies strategist at Citigroup.
The dollar was helped too by data showing Japan's economic growth slowed to zero in the first quarter, prompting predictions the economy was headed for another recession. Moreover, concerns over the prospect of a deflationary spiral were heightened after data showed the pace of existing deflation quickened significantly in 2002.
May 16th 2003, 7:40 pm
#6
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Joined: Dec 2002
Location: United Kingdom.
Posts: 503
Re: Exchange Rate chestnut
Originally posted by pleasancefamily
Dollar selling gathered fresh momentum on Friday, taking the US currency to fresh lows against the Australian and Canadian dollars while the euro rose more than a cent.
After range-trading early in the European session, the greenback began sliding across the board.
Against the Canadian dollar, it fell to its weakest in six years at C$1.3625. The Australian dollar rose to a three-year high at US$0.6519 and the euro rallied a cent to a high of $1.1558, within sight on Monday's four-year high at $1.1623.
The foreign exchange markets appear to be going through one of their occasional regime changes. But if not plumping for the dollar, what are the alternatives?
Strategists said there was no one reason to explain the dollar's renewed weakness, but noted that although it had steadied this week on position-squaring, sentiment towards the currency had remained bearish.
"People had a good run-up on the euro, they’ve taken good profits, but they’re scared of missing the next leg up,� said Paul Bednarczyk, currencies strategist at 4Cast economic consultancy.
Inflation numbers from the US did little to help. The consumer price index fell 0.3 per cent on the month, more than had been expected.
"CPI hasn’t been a significant market mover for the past couple of years, but following the Fed’s comments, the new fear for the economy is now deflation, and weaker numbers weren’t beneficial to the dollar outlook,� said Kamal Sharma, currencies strategist at Commerzbank.
After its last policy meeting, the Federal Reserve's statement referred to the "minor" risk of "an unwelcome substantial fall in inflation," from which strategists inferred the Fed's tacit approval for a weaker dollar with its consequent inflationary pressure.
Even a far stronger reading of consumer confidence failed to lift the dollar. The |University of Michigan's preliminary May index jumped to 93.2 from 86 in April - a far better number than economists had expected.
Mr Sharma said while the headline number was strong, the breakdown was not so positive for the US economy.
"All the gains came in the future expectations component, not the current, which suggests that current factors like the weak labour market are, and will, weigh on sentiment and ultimately consumer spending,� he added.
Against the yen , the dollar stood at Y116.0, having fallen to Y115.33 on Thursday, matching last July's low in the process.
Speculative dollar selling against the yen pushed the US currency to those levels on Thursday before a very sharp rebound back over Y116. The speed of the dollar's bounce, said traders, indicated the Bank of Japan was intervening once more.
Although the BoJ has made no comment about intervention, market participants believe the weakness of the dollar has led the bank to resume the covert interventions it undertook in the first three months of the year.
Strategists at UBS Warburg and Citigroup said the BoJ's actions would put a floor under the dollar's recent slide against the yen.
"The fact that the BoJ remains willing to intervene heavily even ahead of the politically sensitive G7 finance ministers' meeting is testament to the continued strong Japanese appetite for intervention," said Shahab Jalinoos, strategist at UBS Warburg, which forecasts Y118 for the pair in three months time.
"Note that the continued underperformance of Japanese asset markets, especially equities, continue to signal that the yen is sharply overvalued at current levels," said Steve Saywell, senior currencies strategist at Citigroup.
The dollar was helped too by data showing Japan's economic growth slowed to zero in the first quarter, prompting predictions the economy was headed for another recession. Moreover, concerns over the prospect of a deflationary spiral were heightened after data showed the pace of existing deflation quickened significantly in 2002.
Dollar selling gathered fresh momentum on Friday, taking the US currency to fresh lows against the Australian and Canadian dollars while the euro rose more than a cent.
After range-trading early in the European session, the greenback began sliding across the board.
Against the Canadian dollar, it fell to its weakest in six years at C$1.3625. The Australian dollar rose to a three-year high at US$0.6519 and the euro rallied a cent to a high of $1.1558, within sight on Monday's four-year high at $1.1623.
The foreign exchange markets appear to be going through one of their occasional regime changes. But if not plumping for the dollar, what are the alternatives?
Strategists said there was no one reason to explain the dollar's renewed weakness, but noted that although it had steadied this week on position-squaring, sentiment towards the currency had remained bearish.
"People had a good run-up on the euro, they’ve taken good profits, but they’re scared of missing the next leg up,� said Paul Bednarczyk, currencies strategist at 4Cast economic consultancy.
Inflation numbers from the US did little to help. The consumer price index fell 0.3 per cent on the month, more than had been expected.
"CPI hasn’t been a significant market mover for the past couple of years, but following the Fed’s comments, the new fear for the economy is now deflation, and weaker numbers weren’t beneficial to the dollar outlook,� said Kamal Sharma, currencies strategist at Commerzbank.
After its last policy meeting, the Federal Reserve's statement referred to the "minor" risk of "an unwelcome substantial fall in inflation," from which strategists inferred the Fed's tacit approval for a weaker dollar with its consequent inflationary pressure.
Even a far stronger reading of consumer confidence failed to lift the dollar. The |University of Michigan's preliminary May index jumped to 93.2 from 86 in April - a far better number than economists had expected.
Mr Sharma said while the headline number was strong, the breakdown was not so positive for the US economy.
"All the gains came in the future expectations component, not the current, which suggests that current factors like the weak labour market are, and will, weigh on sentiment and ultimately consumer spending,� he added.
Against the yen , the dollar stood at Y116.0, having fallen to Y115.33 on Thursday, matching last July's low in the process.
Speculative dollar selling against the yen pushed the US currency to those levels on Thursday before a very sharp rebound back over Y116. The speed of the dollar's bounce, said traders, indicated the Bank of Japan was intervening once more.
Although the BoJ has made no comment about intervention, market participants believe the weakness of the dollar has led the bank to resume the covert interventions it undertook in the first three months of the year.
Strategists at UBS Warburg and Citigroup said the BoJ's actions would put a floor under the dollar's recent slide against the yen.
"The fact that the BoJ remains willing to intervene heavily even ahead of the politically sensitive G7 finance ministers' meeting is testament to the continued strong Japanese appetite for intervention," said Shahab Jalinoos, strategist at UBS Warburg, which forecasts Y118 for the pair in three months time.
"Note that the continued underperformance of Japanese asset markets, especially equities, continue to signal that the yen is sharply overvalued at current levels," said Steve Saywell, senior currencies strategist at Citigroup.
The dollar was helped too by data showing Japan's economic growth slowed to zero in the first quarter, prompting predictions the economy was headed for another recession. Moreover, concerns over the prospect of a deflationary spiral were heightened after data showed the pace of existing deflation quickened significantly in 2002.
May 16th 2003, 8:36 pm
#7
Finally back home
Joined: Mar 2003
Location: Adelaide, Sth Australia
Posts: 358
Re: Exchange Rate chestnut
Originally posted by pleasancefamily
Dollar selling gathered fresh momentum on Friday, taking the US currency to fresh lows against the Australian and Canadian dollars while the euro rose more than a cent.
After range-trading early in the European session, the greenback began sliding across the board.
Against the Canadian dollar, it fell to its weakest in six years at C$1.3625. The Australian dollar rose to a three-year high at US$0.6519 and the euro rallied a cent to a high of $1.1558, within sight on Monday's four-year high at $1.1623.
The foreign exchange markets appear to be going through one of their occasional regime changes. But if not plumping for the dollar, what are the alternatives?
Strategists said there was no one reason to explain the dollar's renewed weakness, but noted that although it had steadied this week on position-squaring, sentiment towards the currency had remained bearish.
"People had a good run-up on the euro, they’ve taken good profits, but they’re scared of missing the next leg up,� said Paul Bednarczyk, currencies strategist at 4Cast economic consultancy.
Inflation numbers from the US did little to help. The consumer price index fell 0.3 per cent on the month, more than had been expected.
"CPI hasn’t been a significant market mover for the past couple of years, but following the Fed’s comments, the new fear for the economy is now deflation, and weaker numbers weren’t beneficial to the dollar outlook,� said Kamal Sharma, currencies strategist at Commerzbank.
After its last policy meeting, the Federal Reserve's statement referred to the "minor" risk of "an unwelcome substantial fall in inflation," from which strategists inferred the Fed's tacit approval for a weaker dollar with its consequent inflationary pressure.
Even a far stronger reading of consumer confidence failed to lift the dollar. The |University of Michigan's preliminary May index jumped to 93.2 from 86 in April - a far better number than economists had expected.
Mr Sharma said while the headline number was strong, the breakdown was not so positive for the US economy.
"All the gains came in the future expectations component, not the current, which suggests that current factors like the weak labour market are, and will, weigh on sentiment and ultimately consumer spending,� he added.
Against the yen , the dollar stood at Y116.0, having fallen to Y115.33 on Thursday, matching last July's low in the process.
Speculative dollar selling against the yen pushed the US currency to those levels on Thursday before a very sharp rebound back over Y116. The speed of the dollar's bounce, said traders, indicated the Bank of Japan was intervening once more.
Although the BoJ has made no comment about intervention, market participants believe the weakness of the dollar has led the bank to resume the covert interventions it undertook in the first three months of the year.
Strategists at UBS Warburg and Citigroup said the BoJ's actions would put a floor under the dollar's recent slide against the yen.
"The fact that the BoJ remains willing to intervene heavily even ahead of the politically sensitive G7 finance ministers' meeting is testament to the continued strong Japanese appetite for intervention," said Shahab Jalinoos, strategist at UBS Warburg, which forecasts Y118 for the pair in three months time.
"Note that the continued underperformance of Japanese asset markets, especially equities, continue to signal that the yen is sharply overvalued at current levels," said Steve Saywell, senior currencies strategist at Citigroup.
The dollar was helped too by data showing Japan's economic growth slowed to zero in the first quarter, prompting predictions the economy was headed for another recession. Moreover, concerns over the prospect of a deflationary spiral were heightened after data showed the pace of existing deflation quickened significantly in 2002.
Dollar selling gathered fresh momentum on Friday, taking the US currency to fresh lows against the Australian and Canadian dollars while the euro rose more than a cent.
After range-trading early in the European session, the greenback began sliding across the board.
Against the Canadian dollar, it fell to its weakest in six years at C$1.3625. The Australian dollar rose to a three-year high at US$0.6519 and the euro rallied a cent to a high of $1.1558, within sight on Monday's four-year high at $1.1623.
The foreign exchange markets appear to be going through one of their occasional regime changes. But if not plumping for the dollar, what are the alternatives?
Strategists said there was no one reason to explain the dollar's renewed weakness, but noted that although it had steadied this week on position-squaring, sentiment towards the currency had remained bearish.
"People had a good run-up on the euro, they’ve taken good profits, but they’re scared of missing the next leg up,� said Paul Bednarczyk, currencies strategist at 4Cast economic consultancy.
Inflation numbers from the US did little to help. The consumer price index fell 0.3 per cent on the month, more than had been expected.
"CPI hasn’t been a significant market mover for the past couple of years, but following the Fed’s comments, the new fear for the economy is now deflation, and weaker numbers weren’t beneficial to the dollar outlook,� said Kamal Sharma, currencies strategist at Commerzbank.
After its last policy meeting, the Federal Reserve's statement referred to the "minor" risk of "an unwelcome substantial fall in inflation," from which strategists inferred the Fed's tacit approval for a weaker dollar with its consequent inflationary pressure.
Even a far stronger reading of consumer confidence failed to lift the dollar. The |University of Michigan's preliminary May index jumped to 93.2 from 86 in April - a far better number than economists had expected.
Mr Sharma said while the headline number was strong, the breakdown was not so positive for the US economy.
"All the gains came in the future expectations component, not the current, which suggests that current factors like the weak labour market are, and will, weigh on sentiment and ultimately consumer spending,� he added.
Against the yen , the dollar stood at Y116.0, having fallen to Y115.33 on Thursday, matching last July's low in the process.
Speculative dollar selling against the yen pushed the US currency to those levels on Thursday before a very sharp rebound back over Y116. The speed of the dollar's bounce, said traders, indicated the Bank of Japan was intervening once more.
Although the BoJ has made no comment about intervention, market participants believe the weakness of the dollar has led the bank to resume the covert interventions it undertook in the first three months of the year.
Strategists at UBS Warburg and Citigroup said the BoJ's actions would put a floor under the dollar's recent slide against the yen.
"The fact that the BoJ remains willing to intervene heavily even ahead of the politically sensitive G7 finance ministers' meeting is testament to the continued strong Japanese appetite for intervention," said Shahab Jalinoos, strategist at UBS Warburg, which forecasts Y118 for the pair in three months time.
"Note that the continued underperformance of Japanese asset markets, especially equities, continue to signal that the yen is sharply overvalued at current levels," said Steve Saywell, senior currencies strategist at Citigroup.
The dollar was helped too by data showing Japan's economic growth slowed to zero in the first quarter, prompting predictions the economy was headed for another recession. Moreover, concerns over the prospect of a deflationary spiral were heightened after data showed the pace of existing deflation quickened significantly in 2002.
May 16th 2003, 8:45 pm
#8
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Joined: Dec 2002
Location: United Kingdom.
Posts: 503
Re: Exchange Rate chestnut
Originally posted by sally1968
Excuse my ignorance but does this come with an English translation???!!!
Excuse my ignorance but does this come with an English translation???!!!
May 19th 2003, 10:14 am
#9
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Joined: Jan 2003
Location: Dossing with the inlaws
Posts: 302
Re: Exchange Rate chestnut
Originally posted by sally1968
Excuse my ignorance but does this come with an English translation???!!!
Excuse my ignorance but does this come with an English translation???!!!
Try this.
US economy is the biggest, therefore all other currencies benchmarked against that.
US economy is verging on decline (cost of the war etc etc). To prop up the economy, they have reduced interest rates (1.75% I think).
That means that your dollars are not earing much interest, and so the trend is for people to sell them. The obvious choice is the Yen, being the second world currency. Australia has higher interest rates so AU$ are being bought also.
People selling dollars and buying Yen / AU$ pushes the price of the dollar down and the Yen / AU$ up.
The Japanese economy is no better and they can well do without their currency rising. As a major exporter, a Toyota sold in the USA is worth less back in Tokyo when converted to Yen.
The Bank of Japan stepped in and flooded the market with Yen to devalue it.
Confused? ....... me too!
