The currency blog

The second week of Dress Down Friday was for Pratham UK. Hopefully the majority of you were able to attend one of the informative talks by Denise or have been able to look at their website – www.pratham.org.uk.

We had a great response on the day – again only a few people in the office, but a magnificent amount of money raised – the final total for the day is £171.25. Well done to everyone who contributed that is so much more than we ever thought we’d be collecting on a weekly basis – and goes to back up my theory that the people that work at Currencies Direct, are generous and caring individuals!

Sonal Patel bought beers and Phil sold for £1 each at the end of the day, and we added a fun element with Rate Watch – the person closest to the GBP rate against the USD at 5.00pm was the winner and bagged half the pot collected, the rest going to Pratham. Guestimates were £1 each! Well done to Hulya for beating the dealers and getting the exact exchange rate, not the closest but exact – a rare achievement!

This Friday we have a staggering total to beat, but I’m sure if we all pull together we will be able to raise a good amount for this weeks charity – The Food Chain http://www.foodchain.org.uk/

The Food Chain are a London based charity that for 21 years, has been changing and saving the lives of people living with HIV, by providing nourishing food and access to nutritional information to help people regain their health and stay well.

This practical approach to fighting HIV includes the delivery of around 1,000 free meals every weekend in London to a diverse group of people in real need. Food is carefully prepared by an army of trained volunteers, in one of six borrowed kitchens, with each meal individually tailored to take full account of a person’s cultural and medical requirements. Wholesome, hot and cold meals containing essential nutrients are also provided for carers and family members.

Andrew Davies will be coming into the office on Friday (as Denise did last week) to tell us more about The Food Chain, but please feel free to look at their website in the mean time!!

I’m looking forward to reporting on our fundraising activities this week  – giving really makes you feel good!!

Markets are on a positive feel following yesterdays outline by Tim Geithner on the Public Private Investment Program in the US. The plan involves the government buying up toxic assets held by banks which will allow the banks to free up their balance sheets. At the moment the debt sits with the banks and they cannot sell it on or value it, therefore the scheme aims to remove this and hopefully by doing this remove the chains that are preventing lending. President Obama noted that the plan was a vital step but also reaffirmed that there was a “long way to go”. Wall Street experienced a significant rally; the Dow Jones gained nearly 500 points in yesterdays session. The low yielding currencies such as the USD and the YEN weakened on the news as investors sought higher yielding assets; the AUD and NZD continued to rally.

Interestingly EUR/USD has failed so far in its bid to extend towards 1.40 and the USD is at the moment gaining back towards 1.35 after failing to break 1.3730. Sterling has moved higher against the dollar buoyed by the increase in the equity markets and GBP/EUR has also gained back to the 1.08 level. Data released today from the UK showed that the Retail Prices Index (RPI) fell to 0% in February from 0.1% in January- this is the lowest reading since 1960 but can be largely attributed to the fall in mortgage repayments following sharp interest rate cuts. Another inflation indicator the Consumer price Index (CPI) rose unexpectedly to 3.2%- this could be a concern to the Bank Of England as interest rates have been slashed and Quantitative Easing introduced on the premise that inflation would continue to fall…however it does reduce the fear of deflation setting in.

The effects of QE (quantitative easing) have not been fully realised yet.  It was thought that decisive action by the US and British governments would prompt a rally in the fortunes of QE currencies, however the reverse is true.  The pound has slumped against all the currencies refraining from QE, with lows of 1.0607 against the euro.  A currency’s value is no longer dictated by alterations in monetary policy or tweaking the interest rate, it is determined by the markets belief in the short term bailout policies of the respective government.  The fact that QE involves the governments buying of fixed income assets such as corporate bonds has encouraged a thread of optimism in the equity markets, which enjoyed a modest rally toward the end of last week, but sadly the outlook is predominantly bearish.  The main focus of QE is to provide liquidity to those markets dependant on institutional lending.  The process ultimately starts at the top and then filters down to a grass roots level.  This will take time, hence QE is yet to help local economies.

There are definitely more sellers coming into the market.  Although not ‘universally true’, prices the other side of the channel are coming down.  There is so much stock (property) available now that it is starting to become a buyers market.  Would be expats are now in an enviable position as they can to a certain extent, dictate the rate at which prices deflate. 

after topping out at 1.3736 the eur/usd has now reversed and we are closing in on 1.35 as appetite for the usd increases…will it move back towards 1.30?

The dollar remains on the back foot in the currency markets as US stocks posted their first back to back weekly rallies…the added impetus from the Fed being the main driver. The US treasury secretary Tim Geithner is today poised to unveil regulatory reforms to prevent future and further systemic problems in the US economy. In the forex markets we have seen sterling attempt to push over 1.46 against the USD and EUR/USD target 1.37. The USD is not the only currency retreating with the GBP/YEN achieving 140 as the market for now is moving a way from so called “safe haven” currencies; gains in oil and gold have reaffirmed the increased risk sentiment- the question is will it last?
This week we have lots of data snaps from various economies, in the UK we will be focusing on retail sales and CBI distributive trends, CPI and Q4 GDP. CPI is a measure of price movements and a key indicator for inflation, the expectation is for the year on year level to fall to 2.5-2.6%, still above the Bank Of England target of 2%. It is too early to see any effect of Quantitative Easing on inflation but it will be interesting to see what level CPI comes in at. Retail sales figures for February are expected to be down, with the snow and conditions in February not helping. GDP data is expected to affirm a sharp contraction.
The markets this week will mainly focus on the USD; after significant losses last week the USD has a possibility of falling to 1.50 against sterling and 1.40 against the euro. The euro should also come into focus as the market will want to assess what the next move will be for the ECB…in an article for the Wall Street Journal Jean-Claude Trichet stated that Europe does not need more stimulus spending but the ECB could lower interest rates further.

Last Friday saw the first ‘Dress Down Friday’ for Currencies Direct and it was a resounding success. The final total raised for Comic Relief was £105.12 which is fantastic when you consider there were less than 35 people in the office. It shows how much all the team have embraced dress down Friday and how we all want to make it a real success. WELL DONE EVERYONE!!

We received a few interesting fundraising ideas which we’ll be looking at and implementing over the coming weeks. We are keen to do more and ideas can be passed to any of the CSR Champions – Barney, Phil, Jenny, Claire and Sara.

The first week in more casual attire did create a bit of a buzz around the office, with people checking out what everyone else was wearing! Some even forgot and arrived suited and immaculate as always, I’m not mentioning any names Nic!

At 5.30pm last Friday, Phil McHugh had the enterprising idea of bringing in a few beers and selling them for a £1 each with glasses of wine also at the bargain price of £1. That pushed the total up and kept everyone refreshed – genius!

The target has been set – can we break the £100 mark this week? More details on Pratham UK and the results of this week’s Dress Down and Donate to follow… Watch this space…