The currency blog

Just when you thought it was safe to get back into the water after the previous EURUSD short squeeze, we see a 2% move up in the pair and it now trades over 1.25. The combination of the successful Spanish bond auction, speculation of a disappointing US jobs number later today and fears over a US double dip recession all helped the Euro climb against the Dollar. However, the fall-out from the ECB rollover of €442 bn of bank funding has delivered a relative tightening of monetary policy compared to other countries. The subsequent yield advantage of the Euro has been quickly identified by the market and has driven up the price of the Euro against both the Dollar and Sterling. A weaker Euro is needed to drive growth in the Eurozone over the medium term, so the result of the ECB policy of shoring up a trembling Eurozone banking system has been slightly counterproductive. The announced austerity measures across the Eurozone will need to be offset by foreign demand for growth to continue, something that a stronger currency makes less likely.  Whether the ECB sees this as a temporary blip in the downward trajectory of the Euro or we see further Euro strength, it is clear that this issue will be at the front of policy maker minds over the coming months.
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Watch Mark O’Sullivan’s interview on the BBC

http://www.bbc.co.uk/iplayer/episode/b00myn8q/Working_Lunch_22_09_2009/

or watch our daily market commentary podcasts by clicking here

The Harrogate show hosted with French Property News traditionally brings a varied selection of period and new build properties under one roof and affords both buyers and sellers the chance to meet experts in the fields of relocation, currency, taxation and property…this year did not disappoint. Read the rest of this entry »

CD market commentary quoted in the Daily Bourse in France…

http://www.daily-bourse.fr/le-dollar-remonte-apres-avoir-flanche-la-veille-Feed-AFP090513131158.iwyp9kpy.php

With sellers in certain regions of France remaining stubborn when it comes to dropping their prices, increasing numbers of prospective buyers are looking at new builds for their dream home abroad. Given that it typically takes between 18 – 24 months on the build process any movement in the exchange rate has a big impact, especially during highly volatile periods spanning a number of staged payments. Read the rest of this entry »

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.