Danny B

I must cancel my damn email !


Profit-taking sends Canadian Dollar lower
- BoC rate increase arrives on schedule
- Loonie and Pound now on equal footing

Sterling made back the previous week's losses but went about it the hard way. Starting from $2.1050 the Pound rallied to well over $2.15, peaking on Wednesday. It then fell back to $2.12, arriving there late on Thursday. A Friday rally to $2.1350 was followed by another relapse and Sterling began this Monday at $2.13, unchanged from a fortnight ago.

The fact that there were not too many bad results among last week's US economic data seems to have gone unrecognised by the market. The trade deficit was very slightly wider and Retail Sales fell by more than expected, mainly dragged down by consumers' fading appetite for expensive gasoline and the vehicles that guzzle it. Elsewhere there was a chink of light in this month's stronger than expected reading for consumer confidence. Perhaps June's parsimony has given way to July profligacy; maybe it was a sunny day when they took the survey. Whichever, Mr and Mrs Doe are not entirely boot-faced about their economic future. But for them to say they're optimistic and for them to actually put heir hands in their pockets are not the same thing. Investors remain to be convinced that official optimism for the economy will be matched by real activity and continued growth. Until they are, the US Dollar will find it difficult to mount any meaningful recovery.

The Canadian Dollar upheld the tradition of predictable central bank rate increases: buy the rumour, sell the fact. The market's instant reaction to a Bank of Canada tightening move, which took the official interest rate up to 4.5 per cent, was to sell the Loonie. Neither the rate hike nor the reaction was a great surprise. Nor were the week's Canadian ecostats particularly startling. Housing starts were lower but were still at level consistent with strong demand. Existing Home Sales rose only slowly in June but they did rise, as did New Home Prices. Beyond all that, the steady pressure on capacity and inflation suggest that last week's tightening move by the BoC will not be its last.

Sterling's strong showing against the US Dollar was not typical of its performance elsewhere. The slack handful of so-so UK economic figures offered no particular argument for base rates to go anywhere at all. Sterling had to rely on previous - and by now historic - evidence for support. Its only other help came from the even more lacklustre performance of certain other currencies. A speech on Friday by Charles Bean, the Bank of England's' Chief Economist and a member of the Monetary Policy Committee, was studiedly neutral. He was concerned that consumers might raise their expectations for inflation but he would not react to specific increases in, say, house prices. The message for Sterling as a whole was "steady as you go". Base rates might go up, they might not. The most positive angle to be found was a general agreement that, higher or not, UK interest rates are not going down in the foreseeable future and that, in the end, was what kept Sterling afloat.

So what to do?

The Bank of Canada has done its stuff by raising interest rates and investors have reacted in time-honoured manner by selling the currency. Arguably, this puts the Pound and the Loonie both into the same boat because neither central bank is expected to make any change at its next meeting. Buyers of the Canadian Dollar should adopt a neutral stance, buying half of their currency forward.

ann m

No we won't Danny - because, of course, you won't have checked the exchange rate, so you won't have known if it hit $2.30 - so we'll just imagine you sitting in blissful ignorance with a large beer in your hand

We exchanged about 10 weeks ago at $2.19. I also said I wouldn't be checking the rate - but this thread keeps popping up to the top of the queue, and like a moth to a flame ......

Biiiiink

Me too, 2.2190 and I'm still reading despite saying I wouldn't. I'll stop when it gets above what I got

Lisa_W

We got 2.11 yesterday.

Adbru

If it makes you feel any better I had a last minute rush to get currency for our hols on wed, just went to my local branch and asked for $.

rate...... $2.03 !! :curse: :curse:

"but we dont charge commision " said the girl.....
"just stuffed the rates instead" said I.... <walked away fuming, at my own stupidity for not shopping around>

Adbru

cneldred

that is a disgraceful rate, come on name and shame the bank.

Chris

Lisa_W

Isn't that a tourist rate though so you will get slightly less. Ours was with Moneycorp as we were changing the money for our house (and it was this morning not yesterday which I said in my earlier post for some reason!)

Lisa

Adbru

Yip, it was a tourist rate. No way I would transfer a large sum at that rate !!

This was just our spending money for the trip so small fry compared some of the amounts you guys are moving.

It was HBOS (Halifax Bank of Scotland).

Adbru

cneldred

when we went over in April i am sure that we didn't have that much of a haircut (difference between spot rate) when using credit cards for hotel bill.

I am amazed a high street bank in the UK can get away with that.

Chris

Iain Mc

Something seems to be going on today anyway, back up toward the $2.15s for the loonie.

And the US dollar goes from bad to worse... over $2.05 this morning!

Ben W Bell

Bought £25,000 on forward purchase this morning at $2.116. Thought I
d better just buy some in case it goes down too far.

Iain Mc

If the interbank rate is 2.14 what am I liable to be able to wring out of HIFX as a spot rate do you reckon (presuming they'll offer me about 2.12)?

2.125? 2.13?

smitp11

Get yourself a Nationwide Flexaccount and you can use the card to withdraw cash from any ATM and there are no charges. The rate is also quite close to the business exchange rate. I tend to not take any cash now and just find the ATM in the airport and extract some cash....

In addition the Nationwide Credit Card does not charge for using it abroad, again you get business exchange rates on the CAD to GBP conversion.

Patrick.

Ben W Bell

I reckon you'll probably get around 2.18-2.2 if it's that high.

Iain Mc

At first attempt, I got them up to 2.1225.

Going to call back in a bit if the interbank rate is still in the mid 14s and attempt 2.125.

It's only a few Canadian notes difference, but they're mine!



Cheers, Iain