typical

5% better than random walk is pretty damn impressive.

lionheart

So what is your prediction, then?

Millhouse

He is 55% sure that he doesn't know.

The Dean

Short-term: No idea.

Long-term (say, two years): The GBP goes down the toilet..........

The combination of spending cuts, deficit reduction, and delayed recovery will see investors taking their GBP-denominated stuff to other markets.

Mind you, long-term I'm always USD-bullish these days, so it won't just be the GBP that suffers.

I'm not in the "The US is debasing its currency" school of thought. I look more often at the sheer size of the US capital markets and feel that it's the only place big enough to absorb any spare cash (i.e. trillions) that might be sloshing around looking for a place to go...........

Brains1983

surely it's 10% better than the random walk?

weasel central

I am going to sign a new contract in the next month or so and I have an option to be paid in dollars, sterling or euro. (euro being my home currency).

Contract is negotiated in dollars then converted to the one I chose at the rate of the day.
Last time I did this I chose dollars (it was at 1.45 to the euro) and over the year it dropped to around 1.20 so it was worth a couple of grand extra every month.
Its back to this level again, this time I don't feel like the dollar is undervalued but I am puzzled how with all the European bailouts the euro hasn't weakened against it.
So chose dollars and hope for a drop or fix the rate at 1.45 into euro? Its for roughly the next year and a half.

thoughts?

Mogs

I would say the Euro will weaken considerably in the coming months against the dollar. If I had the choice today of currency to be paid in for the next year and a half, I would pick USD.

weasel central

Thats my feeling but I am surprised why its holding at 1.45 right now, there seems no reason for it, unless people are just as afraid of the dollar.

Mogs

Probably because the US is on the verge of possibly having their credit rating downgraded by Moody's - however I think the Eurozone have considerably bigger problems than the US.

The Gulf of Mexico is coming back to life which will bolster the US economy this year - which should help the dollar strength.

typical

Except the dollar is currently climbing based on US economy weakness

See: random walk.

weasel central

predictions? go on then..

Meow

Anyone want to borrow my crystal ball?

I have one in my office. Bought it at a junk shop as so many clients ask me to predict the movements of markets...

typical

Given my track record, the exact opposite of every decision I make.

My currency strategy would be so much easier if I knew which currency I'd be spending most in 3 years...

Seriously, I predict the pound, euro and dollar will all fall against the loonie and aussie dollar. How they will be relative to each other, I have absolutely no clue.

weasel central

well I am interested in the thought process, over the last 5 or so years it has peaked and troughed between an average of 1.5 and 1.2, not that historical issues have any future bearing. So my guess is to consider this a peak, just on this abitrary fact.

I used to do a lot of spread betting on FX, very short term stuff, so I understand the random nature of it, but I'd like to hear from financial types who normally try to justify the decision based on some sort of logic rather than admitting the markets are just gambling.

kittycat1

Ok so basically just send meoney home as noone has a clue then....