Exchange rate
Oct 26th 2010, 3:03 pm
#2656
Dive Bar Drunk
Joined: Nov 2006
Location: Toronto
Posts: 8,649
Re: Exchange rate
STERLING BOTTOM OF THE PILE
Twin fears of double-dip recession and QE revitalised by UK events. BoC statement reins in the Loonie.
After a promising start that took it a cent higher over the next 36 hours sterling fell back steadily to open in London this morning a cent lower on the week.
Events conspired against sterling, as did the market. On Tuesday the Bank of England's Mervyn King said the next decade would be a SOBER one (Savings, Orderly Budgets and Equitable Rebalancing) in contrast to the previous NICE one (Non-Inflationary Consistent Expansion). In calling for more savings he was at odds with his deputy, Charlie Bean, who said a couple of weeks ago that monetary policy was aimed at encouraging consumers to spend, not save.
The governor set the tone for the chancellor's spending review the following day. There was nothing wholly surprising in the statement; most of the important aspects had been leaked to the media in the ongoing effort to manage expectations. But that did not prevent investors becoming downbeat when the chancellor confirmed the loss of half a million public sector jobs and the purchase of two anti-aircraft carriers. There had also been bad news earlier in the day when the minutes of the Monetary Policy Committee (MPC) meeting showed that one member had voted for another £50 billion of quantitative easing (QE).
UK statistical releases were both sparse and unhelpful. The Confederation of British Industry said orders were down again in October. So were September's mortgage approvals and retail sales.
Overshadowing the week was the upcoming G20 finance ministers' meeting. There was abundant warning that G20 would have something to say about misaligned exchange rates but what? Not a lot, in the end. There was no chance of a decision to alter currency values; almost everyone at the table wanted their own currency to be at the weaker and more competitive end of the spectrum. You don't win export orders with an unduly strong currency that prices you out of the market. All that G20 could "agree" on was to democratise the Old-World aristocracy at the top of the International Monetary Fund, by promoting representatives of the influential emerging economies, and to head off a trade war by discouraging a currency race to the bottom. As such, it was neither a surprise nor a disappointment.
As far as the Canadian dollar was concerned, investors saw the result as more of the same; a continuation of the status quo. There would be no attempt to prop up the US dollar, just as there would be no effort to depress the yen or the commodity currencies. With no special mention of sterling the assumption was that it would continue to hang out to dry for the same old reasons; the twin prospects of QE and double-dip recession.
Canada's economic data did not bring much to the table. An upward shift in inward investment and a downward one for investments abroad carried no serious implications. Wholesale sales were up by 1.2% in August while the leading indicator for September edged -0.1% lower. Inflation at 1.9% was exactly on target and retail sales were above target with a 0.5% monthly increase. The sour note for the Loonie lay in the Bank of Canada's monetary policy report. A downgrade of the Bank's growth projections for the Canadian economy put it under downward pressure.
There is every sign that sterling is heading down the same road to destruction as the US dollar. The one thing in its favour might be that every pundit from Sydney to San Francisco seems to agree it is doomed. When your granny's hairdresser tells her it's time to sell sterling it is probably the end of the downward road. However, "probably" is not the same as "certainly". Having previously suggested they hedge at least half their requirement, buyers of the Canadian dollar should stick with that strategy, covering a higher percentage if a capital investment is imminent.
Twin fears of double-dip recession and QE revitalised by UK events. BoC statement reins in the Loonie.
After a promising start that took it a cent higher over the next 36 hours sterling fell back steadily to open in London this morning a cent lower on the week.
Events conspired against sterling, as did the market. On Tuesday the Bank of England's Mervyn King said the next decade would be a SOBER one (Savings, Orderly Budgets and Equitable Rebalancing) in contrast to the previous NICE one (Non-Inflationary Consistent Expansion). In calling for more savings he was at odds with his deputy, Charlie Bean, who said a couple of weeks ago that monetary policy was aimed at encouraging consumers to spend, not save.
The governor set the tone for the chancellor's spending review the following day. There was nothing wholly surprising in the statement; most of the important aspects had been leaked to the media in the ongoing effort to manage expectations. But that did not prevent investors becoming downbeat when the chancellor confirmed the loss of half a million public sector jobs and the purchase of two anti-aircraft carriers. There had also been bad news earlier in the day when the minutes of the Monetary Policy Committee (MPC) meeting showed that one member had voted for another £50 billion of quantitative easing (QE).
UK statistical releases were both sparse and unhelpful. The Confederation of British Industry said orders were down again in October. So were September's mortgage approvals and retail sales.
Overshadowing the week was the upcoming G20 finance ministers' meeting. There was abundant warning that G20 would have something to say about misaligned exchange rates but what? Not a lot, in the end. There was no chance of a decision to alter currency values; almost everyone at the table wanted their own currency to be at the weaker and more competitive end of the spectrum. You don't win export orders with an unduly strong currency that prices you out of the market. All that G20 could "agree" on was to democratise the Old-World aristocracy at the top of the International Monetary Fund, by promoting representatives of the influential emerging economies, and to head off a trade war by discouraging a currency race to the bottom. As such, it was neither a surprise nor a disappointment.
As far as the Canadian dollar was concerned, investors saw the result as more of the same; a continuation of the status quo. There would be no attempt to prop up the US dollar, just as there would be no effort to depress the yen or the commodity currencies. With no special mention of sterling the assumption was that it would continue to hang out to dry for the same old reasons; the twin prospects of QE and double-dip recession.
Canada's economic data did not bring much to the table. An upward shift in inward investment and a downward one for investments abroad carried no serious implications. Wholesale sales were up by 1.2% in August while the leading indicator for September edged -0.1% lower. Inflation at 1.9% was exactly on target and retail sales were above target with a 0.5% monthly increase. The sour note for the Loonie lay in the Bank of Canada's monetary policy report. A downgrade of the Bank's growth projections for the Canadian economy put it under downward pressure.
There is every sign that sterling is heading down the same road to destruction as the US dollar. The one thing in its favour might be that every pundit from Sydney to San Francisco seems to agree it is doomed. When your granny's hairdresser tells her it's time to sell sterling it is probably the end of the downward road. However, "probably" is not the same as "certainly". Having previously suggested they hedge at least half their requirement, buyers of the Canadian dollar should stick with that strategy, covering a higher percentage if a capital investment is imminent.
Oct 26th 2010, 3:43 pm
#2657
BE Forum Addict
Joined: Sep 2008
Location: NS
Posts: 1,111
Re: Exchange rate
you know when ur speeding down the runway and 250 people are willing the plane to get off the ground........
Oct 26th 2010, 5:11 pm
#2658
Joined: Aug 2005
Posts: 14,227
Re: Exchange rate
STERLING BOTTOM OF THE PILE
Twin fears of double-dip recession and QE revitalised by UK events. BoC statement reins in the Loonie.
After a promising start that took it a cent higher over the next 36 hours sterling fell back steadily to open in London this morning a cent lower on the week.
Events conspired against sterling, as did the market. On Tuesday the Bank of England's Mervyn King said the next decade would be a SOBER one (Savings, Orderly Budgets and Equitable Rebalancing) in contrast to the previous NICE one (Non-Inflationary Consistent Expansion). In calling for more savings he was at odds with his deputy, Charlie Bean, who said a couple of weeks ago that monetary policy was aimed at encouraging consumers to spend, not save.
The governor set the tone for the chancellor's spending review the following day. There was nothing wholly surprising in the statement; most of the important aspects had been leaked to the media in the ongoing effort to manage expectations. But that did not prevent investors becoming downbeat when the chancellor confirmed the loss of half a million public sector jobs and the purchase of two anti-aircraft carriers. There had also been bad news earlier in the day when the minutes of the Monetary Policy Committee (MPC) meeting showed that one member had voted for another £50 billion of quantitative easing (QE).
UK statistical releases were both sparse and unhelpful. The Confederation of British Industry said orders were down again in October. So were September's mortgage approvals and retail sales.
Overshadowing the week was the upcoming G20 finance ministers' meeting. There was abundant warning that G20 would have something to say about misaligned exchange rates but what? Not a lot, in the end. There was no chance of a decision to alter currency values; almost everyone at the table wanted their own currency to be at the weaker and more competitive end of the spectrum. You don't win export orders with an unduly strong currency that prices you out of the market. All that G20 could "agree" on was to democratise the Old-World aristocracy at the top of the International Monetary Fund, by promoting representatives of the influential emerging economies, and to head off a trade war by discouraging a currency race to the bottom. As such, it was neither a surprise nor a disappointment.
As far as the Canadian dollar was concerned, investors saw the result as more of the same; a continuation of the status quo. There would be no attempt to prop up the US dollar, just as there would be no effort to depress the yen or the commodity currencies. With no special mention of sterling the assumption was that it would continue to hang out to dry for the same old reasons; the twin prospects of QE and double-dip recession.
Canada's economic data did not bring much to the table. An upward shift in inward investment and a downward one for investments abroad carried no serious implications. Wholesale sales were up by 1.2% in August while the leading indicator for September edged -0.1% lower. Inflation at 1.9% was exactly on target and retail sales were above target with a 0.5% monthly increase. The sour note for the Loonie lay in the Bank of Canada's monetary policy report. A downgrade of the Bank's growth projections for the Canadian economy put it under downward pressure.
There is every sign that sterling is heading down the same road to destruction as the US dollar. The one thing in its favour might be that every pundit from Sydney to San Francisco seems to agree it is doomed. When your granny's hairdresser tells her it's time to sell sterling it is probably the end of the downward road. However, "probably" is not the same as "certainly". Having previously suggested they hedge at least half their requirement, buyers of the Canadian dollar should stick with that strategy, covering a higher percentage if a capital investment is imminent.
Twin fears of double-dip recession and QE revitalised by UK events. BoC statement reins in the Loonie.
After a promising start that took it a cent higher over the next 36 hours sterling fell back steadily to open in London this morning a cent lower on the week.
Events conspired against sterling, as did the market. On Tuesday the Bank of England's Mervyn King said the next decade would be a SOBER one (Savings, Orderly Budgets and Equitable Rebalancing) in contrast to the previous NICE one (Non-Inflationary Consistent Expansion). In calling for more savings he was at odds with his deputy, Charlie Bean, who said a couple of weeks ago that monetary policy was aimed at encouraging consumers to spend, not save.
The governor set the tone for the chancellor's spending review the following day. There was nothing wholly surprising in the statement; most of the important aspects had been leaked to the media in the ongoing effort to manage expectations. But that did not prevent investors becoming downbeat when the chancellor confirmed the loss of half a million public sector jobs and the purchase of two anti-aircraft carriers. There had also been bad news earlier in the day when the minutes of the Monetary Policy Committee (MPC) meeting showed that one member had voted for another £50 billion of quantitative easing (QE).
UK statistical releases were both sparse and unhelpful. The Confederation of British Industry said orders were down again in October. So were September's mortgage approvals and retail sales.
Overshadowing the week was the upcoming G20 finance ministers' meeting. There was abundant warning that G20 would have something to say about misaligned exchange rates but what? Not a lot, in the end. There was no chance of a decision to alter currency values; almost everyone at the table wanted their own currency to be at the weaker and more competitive end of the spectrum. You don't win export orders with an unduly strong currency that prices you out of the market. All that G20 could "agree" on was to democratise the Old-World aristocracy at the top of the International Monetary Fund, by promoting representatives of the influential emerging economies, and to head off a trade war by discouraging a currency race to the bottom. As such, it was neither a surprise nor a disappointment.
As far as the Canadian dollar was concerned, investors saw the result as more of the same; a continuation of the status quo. There would be no attempt to prop up the US dollar, just as there would be no effort to depress the yen or the commodity currencies. With no special mention of sterling the assumption was that it would continue to hang out to dry for the same old reasons; the twin prospects of QE and double-dip recession.
Canada's economic data did not bring much to the table. An upward shift in inward investment and a downward one for investments abroad carried no serious implications. Wholesale sales were up by 1.2% in August while the leading indicator for September edged -0.1% lower. Inflation at 1.9% was exactly on target and retail sales were above target with a 0.5% monthly increase. The sour note for the Loonie lay in the Bank of Canada's monetary policy report. A downgrade of the Bank's growth projections for the Canadian economy put it under downward pressure.
There is every sign that sterling is heading down the same road to destruction as the US dollar. The one thing in its favour might be that every pundit from Sydney to San Francisco seems to agree it is doomed. When your granny's hairdresser tells her it's time to sell sterling it is probably the end of the downward road. However, "probably" is not the same as "certainly". Having previously suggested they hedge at least half their requirement, buyers of the Canadian dollar should stick with that strategy, covering a higher percentage if a capital investment is imminent.
When I was changing my gbp a couple of years ago you could have made money by doing the opposite of what they said!
Nov 25th 2010, 7:52 pm
#2659
Forum Regular
Joined: Aug 2005
Location: Guelph, ON
Posts: 49
Re: Exchange rate
Down sharply over the last couple of days. Is this the possibility of interest rate hikes in Canada? Things had been fairly stable for a while.
Nov 25th 2010, 8:16 pm
#2660
Forum Regular
Joined: Jun 2009
Location: Orlando Florida
Posts: 251
Re: Exchange rate
Nov 25th 2010, 11:35 pm
#2662
BE Enthusiast
Joined: Nov 2007
Location: Abbotsford, BC
Posts: 450
Re: Exchange rate
Great time to Buy the pound, Just got 1.59 with hsbc premier that will come in handy for up coming trips back to the UK. This is a 4-5 month high for the Canadian dollar.
Dec 15th 2010, 4:30 pm
#2663
Forum Regular
Joined: Jan 2008
Posts: 81
Re: Exchange rate
Looks like its in freefall today 
Dec 15th 2010, 4:36 pm
#2664
Dive Bar Drunk
Joined: Nov 2006
Location: Toronto
Posts: 8,649
Re: Exchange rate
Yes back down to 1.56.
Interestingly they are under pressure now to start raising interest rates gradually in the UK due to inflation.
There has also been a lot of press this week about the personal debt mountain in Canada with the average Canadian owing something like $1.47 for every dollar the country earns.
My predictions with currency this year have not been great (see previous posts!). I do however think we saw the bottom at 1.50 and I think next year will be more promising for the £.
I earn in $$$$'s and have a lot of savings in ££££'s so I am diversified. That's how I see it anyway.
Interestingly they are under pressure now to start raising interest rates gradually in the UK due to inflation.
There has also been a lot of press this week about the personal debt mountain in Canada with the average Canadian owing something like $1.47 for every dollar the country earns.
My predictions with currency this year have not been great (see previous posts!). I do however think we saw the bottom at 1.50 and I think next year will be more promising for the £.
I earn in $$$$'s and have a lot of savings in ££££'s so I am diversified. That's how I see it anyway.
Jan 25th 2011, 3:49 pm
#2666
Joined: Aug 2005
Posts: 14,227
Re: Exchange rate
For the 1 or 2 people (other than me) that might be care about this sort of thing there was an interesting blog post on FT alphaville about interest rate movements. Not that significant rate rises are going to happen any time soon mind.
Jan 25th 2011, 11:00 pm
#2667
BE Forum Addict
Joined: Apr 2008
Location: Calgary
Posts: 3,340
Re: Exchange rate
For the 1 or 2 people (other than me) that might be care about this sort of thing there was an interesting blog post on FT alphaville about interest rate movements. Not that significant rate rises are going to happen any time soon mind.
http://www.telegraph.co.uk/finance/e...nce-1920s.html
Jan 26th 2011, 1:56 am
#2668
Joined: Aug 2005
Posts: 14,227
Re: Exchange rate
Difficult to see much in the way of interest rate increases for the forseeable future against this background:
http://www.telegraph.co.uk/finance/e...nce-1920s.html
http://www.telegraph.co.uk/finance/e...nce-1920s.html
The situation is less clear cut here - but household debt is some of the highest in the world (higher than the US and UK by any means) so rises here seem unlikely to me despite the high inflation figures that stats can came out with recently.
Jan 26th 2011, 2:45 am
#2669
BE Enthusiast
Joined: Nov 2007
Location: Abbotsford, BC
Posts: 450
Re: Exchange rate
Looking at the Bank of Canada website the CAD average for 2010 was $1.5911 against the GBP. Potentially this could be even lower for 2011 as the GBP did not dip below $1.6 against GBP until March 2010.
I'm sticking with buying as many pounds as possible whilst it it struggling to break $1.6. My prediction 1.57 average for 2011. $1.65 average for 2012
I'm sticking with buying as many pounds as possible whilst it it struggling to break $1.6. My prediction 1.57 average for 2011. $1.65 average for 2012
Feb 14th 2011, 8:47 pm
#2670
Joined: Aug 2005
Posts: 14,227
Re: Exchange rate
Here is the fall in all it's glory from the date of the OP.