August not so quiet for foreign exchange brokers

19 August, 2013

Tom Arnold

Who says August is normally a quieter month, with much of the world jetting away for their holidays? Over the last week, we have seen Sterling hit surprising highs following a raft of more positive than expected data, the Eurozone come out of recession and the US Dollar fall away having been the dominant currency for much of the last few months. This week is likely to be slightly more subdued with no real data of note until Friday, when things do hot up significantly before the long weekend break here in the UK. The only real data of note before then comes in the form of the minutes from the Reserve Bank of Australia’s most recent meeting, on Tuesday morning, and the US Federal Reserve’s most recent policy meeting, on Wednesday evening. The Australian Dollar has been consistently weakening for the last 4 months, providing rates more than 10% better than they were in March, so further insight into their monetary policy will allow those of you looking to send money over to Australia to gauge whether the gift horse’s mouth is ready, or whether a bit more time is on your side. Given the recent turnaround in US Dollar strength, the Fed’s minutes will be interesting too, with many analysts still talking the US economy up – August’s Non-farm payrolls next week could also give further indications. Thursday sees things start to ramp up, with lots of European manufacturing and services data due out in the morning, before some US jobs, housing and manufacturing data at lunch time. Not much of this data is expected to be significantly market moving, leaving Friday to bring out the big guns… German GDP starts us off at 7am – as the dominant economy in Europe and following the Eurozone’s recent move out of recession, this will be absolutely critical. The single currency needs a very good reading from Germany to maintain momentum. At 9.30am we have UK mortgage approvals and business investment figures, but these will be overshadowed by UK GDP figures. This is the second revision of the Q2 figures and again is critical for the Pound’s strength. Any wavering of the previous figures could see the Pound slip away very rapidly. So… What does all of this mean for those of you wishing to send money abroad? Sterling is at the best rates for more than a month against the Euro and the US Dollar, and while this is not likely to change too much as the week progresses, it could change dramatically on Friday, so anyone looking to exchange into either of these, should keep in very close contact with your CI account manager to make sure you are keeping abreast of the market’s movements and to make sure you are aware of all of your options. For other currencies, particularly the Australian Dollar, this could also be a week of significant movement, so again make sure CI’s number – 0800 043 2623 / 0044 (0)1923 725 725 – is kept close to hand when sending money abroad.