Jump to content
House Price Crash Forum
Sign in to follow this  
Realistbear

Pound Soars Against Dollar, Euro And Yen

Recommended Posts

http://www.tradingmarkets.com/.site/news/F...%20NEWS/331718/

Dovish Remarks Weaken Japanese Yen Against British Pound Early Friday
Friday, August 04, 2006; Posted: 07:56 AM
(RTTNews) - The Japanese yen further weakened against the British pound early Friday in New York trading. The yen held steady against the pound during overnight trading. However, the Japanese currency lost ground against its British counterpart during the early morning hours.

http://www.tradingmarkets.com/.site/news/F...%20NEWS/331757/

Pound Advanced To New Multi-Month High Against Euro
Friday, August 04, 2006; Posted: 08:14 AM
(RTTNews) - The British pound advanced against the Euro early Friday in New York.

http://today.reuters.co.uk/investing/finan...SE-BOE-HIKE.XML

Sterling jumps, stocks fall on surprise BoE hike
Thu Aug 3, 2006 12:16 PM BST162
LONDON, Aug 3 (Reuters) - Sterling rallied a full U.S. cent and hit a 2-1/2 month peak versus the euro, while UK stocks fell on Thursday after the Bank of England surprised the markets by raising interest rates by 25 basis points to 4.75 percent. Sterling jumped to a two-month high against the dollar at 1105 GMT above $1.8840 <GBP=>, up more than one cent from before decision levels. Against the euro, sterling hit a fresh 2-1/2 month high at 67.72 pence <EURGBP=>.

1 U.K. £ =

1 US $= 1.9104 Euro= 1.4802 Yen = 218.3340 :o

Many still believe in the Miracle Econbomy it seems despite our rising twin deficits, employments problems and exploding debt. Or are the world's currencies trying to devalue in the wake of recessionary trends to maintain competitiveness. With the pound soaring to the number one slot in the world's currency market who will be able to afford whast little we have left to export?

Edited by Realistbear

Share this post


Link to post
Share on other sites

So you still think the US$ is a safe haven then? :lol:

Cable trading at $1.91 btw...

Long term yes. Why did the dollar tank today? Because the US ADDED 113,000 jobs. We are still shedding jobs. The expectation on the USD is much higher.

The UK cannot afford the world's most overvalued currency because, unlike the Japanese, we are a net importer. Our manufacturing base is dissappearing and we have nothing holding our economy together other than HPI-MEW. Even our once growing services sector is contracting as companies realise its cheaper to offshore or conduct business abroad. With the pound soaring against every major currency in the world we are fast pricing ourselves out of existence which will only hasten the crash.

Share this post


Link to post
Share on other sites

There's an interesting USA Today article about America's finances:

http://www.usatoday.com/printedition/news/...t03.art_dom.htm

The new Medicare prescription-drug benefit alone would have added $8 trillion to the government's audited deficit. That's the amount the government would need today, set aside and earning interest, to pay for the tens of trillions of dollars the benefit will cost in future years.

Standard accounting concepts say that $8 trillion should be reported as an expense. Combined with other new liabilities and operating losses, the government would have reported an $11 trillion deficit in 2004 — about the size of the nation's entire economy.

Keep up those $11 trillion a year deficits and pretty soon we'll be talking real money.

Share this post


Link to post
Share on other sites

Which can only be a good thing IMO...

I'm afraid you're wrong regarding the US$'s long term prospects though. Prepare for massive devaluation of the greenback in the coming years. You ain't seen nothing yet! ;)

The problem is that the US is 40% of the world's GDP. They are our second largest trading partner. If the $ goes south depression follows which is not good news for the UK.

We have rocketing twin deficits also. Our debt is greater than the US on a per-capita basis (1.3 trillion pounds) and North Sea oil is dwindling. We are losing our manufacturing base and unemployment is growing whereas in the US they are still adding jobs.

We are as dependent on debt as the US and have indulged in HPI-MEW to the same, if not greater extent. The US HPC will involve the froth markets. Our HPC will involve the entire country as every market is overtpriced in relation to the multiples and any other fundamentals you care to name.

With the pound soaring against all the world's majors our competitive edge is history. What little export market we have will be gone that much sooner. The Miracle Economy is no more than debt sourced from accomodative Japanese rates. If the pound is relying on our ability to keep borrowing then sterling is being set up for another fall.

Edited by Realistbear

Share this post


Link to post
Share on other sites

I can't speak for anyone else, but at least for the company I work for the cost of our 'exports' is barely affected by the value of the pound, because they're not manufactured in the UK. It might reduce profits a little, but won't affect foreign sales.

If the pound is relying on our ability to keep borrowing then sterling is being set up for another fall.

Probably. But the US dollar is no better.

Share this post


Link to post
Share on other sites

...The UK cannot afford the world's most overvalued currency because, unlike the Japanese, we are a net importer. Our manufacturing base is dissappearing and we have nothing holding our economy together other than HPI-MEW.

But it makes importing cheap cr@p from Aisa even cheaper! :lol:

...and oil :ph34r:

Share this post


Link to post
Share on other sites

But it makes importing cheap cr@p from Aisa even cheaper! :lol:

...and oil :ph34r:

That is the problem. We just spend more and produce less. And people buy less from us as elsewhere is cheaper.

Share this post


Link to post
Share on other sites

I warned you about this last week RB! You keep saying cable is headed for $1.60 and now look what you've done!

Try saying it will go to $2.10 for a bit. That should cool it down. :)

Share this post


Link to post
Share on other sites

Don't read too much into the dollar being well down on the pound today. The first Friday of every month is when 'non-farm payroll' figures are released and this always causes the dollar to spike one way or the other, and, as a result, US markets and the relative value of other currencies to head the other way.

Share this post


Link to post
Share on other sites

I certainly agree, looking at the bigger picture, that the dollar is under a cloud. I've read numerous well-supported articles as to why it's heading South. Today's movement is more about today than the bigger picture, but I agree that the bigger picture does tell the same story.

Share this post


Link to post
Share on other sites

don't normally like to gloat but will make an exception in this case - i said cable was going back to 1.90 a few weeks ago - the US tightening cycle is coming to an end and today's NFP just went to confirm that - personally i think there is still a chance of a rise on tuesday but from then on, not much - on the other hand, anyone over here who thinks the BoE will stop at one rise is off their trolley - yesterday's rise caught most off guard, including myself - i am obviously just guessing here, but I suspect that next week's inflation report will have a couple of nasties in it

Share this post


Link to post
Share on other sites

Agree with the views on long term IR. Up up and away as inflation has only just begun to show itself after a decade of irrational borrowing and spending. A recession in the US seems certain at some point at which time it will drag Europe down also vastly lowering our standards of living. When you think about it, all those second homes, Porsches, tat etc. had to be paid for with more than just borrowed Yen.

The wealth has moved East and as some from India have said on this website, it makes no sense remaining in England which is going down when India offers a higher standard of living at a lower cost. When you produce you deserve the standard. When you simply borrow, as we do, we get what we deserve. Skint.

The pound's day in the sun cannot be long. I would expect it to rise to the high 1.90's for awhile and then crash.

Share this post


Link to post
Share on other sites

The pound's day in the sun cannot be long. I would expect it to rise to the high 1.90's for awhile and then crash.

quite possibly - these things take it in turns - at the moment i think the pound has most going for it of all the currncies but i also think it won't be too long before the yen takes over

important to remember that currency rates are merely one currncy against another and don't reflect on the strength of economies in general

Share this post


Link to post
Share on other sites

The problem is that the US is 40% of the world's GDP. They are our second largest trading partner. If the $ goes south depression follows which is not good news for the UK.

~25%

Share this post


Link to post
Share on other sites

So you still think the US$ is a safe haven then? :lol:

Cable trading at $1.91 btw...

don't think so folks!!!!...well not as far as the rest of the world is concerned.

I feel the story with cable somewhat different.

A couple of months ago I had a hunch that the BoE were reasonably happy sabotaging the housing market in order to expand earnings capability of the FTSE.

yesterday we saw the beginning of that process.Short term £ will head up towards $2,but as the housing situation unwinds,in quite a bloody fashion,sterling will retreat towards equilibrium,that being $1.60 ish.

looks like a repeat of the late 1970's.complete with public sector disquiet(health service and local government this time,not the miners),protracted war in the middle east(just like iran/iraq but this time regional),and sterling crisis to follow(although crisis is a matter of opinion depending on how you hedge your bets).

how does this work....erm,simple.FTSE has a large,and increasing weighting of commodity and energy companies....if there is war then the first instinct is fear of supply disruption,raising prices.As the fear subsides and the supply problem is nowhere near as bad as thought....funnily new sources come online at the same time.....earnings rise more than expected,giving such stocks a fillip(supercycle theory)

the demand is still there.

...a pandemic would F*** it up but that'll probably follow military action,if you believe that such things are merely a method of population control kept under wraps.

the housing market heading south now will tie us in nicely with our average cable rate in a couple of years.better exchange rates a couple of years hence also translate to better earnings after conversion......FTSE basics look cheap!!!!!

Edited by oracle

Share this post


Link to post
Share on other sites
Guest Alright Jack

If I may put forward my view.

The dollar is begining its next leg downwards. The only thing preventing the dollar from outright collapse is central banks around the world helping prop it up - the BoE has been plugging the gap somewhat since Asia began diversifying out of the dollar.

I think the rate rise yesterday is to try to mitigate the effects of what the BoE need to do next. They are going to print another enormous wad of £ to buy US treasuries in an act of desperate merchantilism.

Get ready for the flood of money guys. Many pundits (Bates, Puplava, Saxena, Turk etc, you know who they are!) have been warning us to get the ark built because the big day is coming!

Share this post


Link to post
Share on other sites

If the Fed don't raise and the BoE minutes show serious inflation concerns, the pound is only going higher against the dollar... so whether to buy now really depends on what you think will happen in the next few weeks.

Share this post


Link to post
Share on other sites

If I may put forward my view.

The dollar is begining its next leg downwards. The only thing preventing the dollar from outright collapse is central banks around the world helping prop it up - the BoE has been plugging the gap somewhat since Asia began diversifying out of the dollar.

I think the rate rise yesterday is to try to mitigate the effects of what the BoE need to do next. They are going to print another enormous wad of £ to buy US treasuries in an act of desperate merchantilism.

Get ready for the flood of money guys. Many pundits (Bates, Puplava, Saxena, Turk etc, you know who they are!) have been warning us to get the ark built because the big day is coming!

...the next dollar leg downwards will be mainly against asia and euroland,that's my point.

..anywhere that has not indulged in the property boom will be vulnerable.Even those who have,such as france(mainly through us buying there) will feel the effects.

when global imbalances have been talked about,the cryptic meaning is:

US and UK consumers kept the global economy going the last 15 years while germany,france and japan languished......now they need a breather and the rest of you need to take up the slack.

call me cynical but isn't it funny how the US,UK,etc seem to be falling off a cliff while the likes of japan and co are just getting themselves off the deck.

doesn't bode well for the Anglo-saxon economies does it???

Share this post


Link to post
Share on other sites

IMO, the pounds time at these kinds of levels will be short lived. All of the fundamentals are negative with GDP slowing, unemployment trending up, twin deficits both growing, manufacturing dropping, HPI-MEW on its last legs as indicated by the sharp upward trend in market stress (Bankruptcies and company insolvencies), builders reporting lower earnings etc.

Here is the FT on the subject:

http://www.ft.com/cms/s/83552dd2-23a4-11db...00779e2340.html

Sterling surges towards mythical $2 mark

By Darryl Thomson

Published: August 4 2006 11:55 | Last updated: August 4 2006 17:47
Sterling stole the headlines in the currency market this week, surging 1.7 per cent to a 16-month high in trade-weighted terms after a surprise UK rate rise.
Some even saw the pound as primed for an assault on the near-mythical $2 mark, a level last reached in September 1992 prior to the Black Wednesday debacle and the pound’s ignominious exit from the Exchange Rate Mechanism.
“The rate hike has put sterling in demand, and with the US dollar weakening, the pound will soon move above $2,” said Hans Redeker, head of currency strategy at BNP Paribas.
The quarter-point rise in UK rates to 4.75 per cent was enough for the pound to rally 2.5 per cent to $1.9094 during the week, a 15-month high. Sterling also jumped 1.4 per cent to a seven-month high of £0.6752 to the euro, 1.6 per cent to a two-year high of SFr against the Swiss franc, and 2.5 per cent to Y217.84 against the yen, its highest level since October 1998.
Much of the optimism was based on the action in the futures market, which moved to fully price in another rate rise by February. Some went further, with ABN Amro changing its house call to predict rates will hit 5 per cent in November and 5.5 per cent in 2007.
But the debate was far from one-sided. Daragh Maher, senior FX strategist at Calyon, saw this week’s rise as a one-off, with sterling “vulnerable to any indications that this week’s hike was premature”.
Even Mr Redeker warned that rate expectations were getting ahead of themselves and that the pound was now as overvalued in purchasing power parity terms as it was before its collapse in 1992.

With sterling this overvalued collapse does beckon and when the currency markets decide its time to get out of sterling it will crash overnight. We have been there before and with negative fundamentals building anything could trigger the market.

Share this post


Link to post
Share on other sites

...the next dollar leg downwards will be mainly against asia and euroland,that's my point.

..anywhere that has not indulged in the property boom will be vulnerable.Even those who have,such as france(mainly through us buying there) will feel the effects.

when global imbalances have been talked about,the cryptic meaning is:

US and UK consumers kept the global economy going the last 15 years while germany,france and japan languished......now they need a breather and the rest of you need to take up the slack.

call me cynical but isn't it funny how the US,UK,etc seem to be falling off a cliff while the likes of japan and co are just getting themselves off the deck.

doesn't bode well for the Anglo-saxon economies does it???

Anglo economies (US, GB, AUS) are all up the creek without a paddle. All these economies have been on a spending binge with borrowed money. Growth in these economies has been bought with this borrowed money, not via exports like Russia, China and India.

It is pay back time.

Stay away from USD, GBP, and especially property in these economies.

Buy GOLD, SILVER, OIL, NATURAL GAS, and EUROS for currency.

Edited by Pluto

Share this post


Link to post
Share on other sites

Stay away from USD, GBP, and especially property in these economies.

Buy GOLD, SILVER, OIL and EUROS for currency.

spot on mate....precisely what I have been doing for a couple of years.

basic resources will hold up.Anything remotely connected with consumers will be crippled.....this includes IT hardware/technology for now,until the demand from these developing economies kicks in.Bits of technology will be ok..like software and altenative energy(pv cells/li batteries etc)...but for the most part technology is an avoid because of rising costs and product deflation.

raw materials is where it's at...they are the ones with pricing power.

Share this post


Link to post
Share on other sites
Guest Alright Jack

God knows what's going on.

What I will say is that the current so called strength of the pound says FAR MORE about the other currencies than it does about sterling itself.

Share this post


Link to post
Share on other sites
Guest grumpy-old-man

I'm off to the US on holiday in 4 weeks time. Should I buy my dollars right now or wait another couple of weeks?

I'd buy them right now as it might cost you an extra £9.40 if you wait a few weeks :rolleyes:

glad to see your focusing on the bigger picture.

Share this post


Link to post
Share on other sites

spot on mate....precisely what I have been doing for a couple of years.

basic resources will hold up.Anything remotely connected with consumers will be crippled.....this includes IT hardware/technology for now,until the demand from these developing economies kicks in.Bits of technology will be ok..like software and altenative energy(pv cells/li batteries etc)...but for the most part technology is an avoid because of rising costs and product deflation.

raw materials is where it's at...they are the ones with pricing power.

I partly agree. I have taken up a minority position in UKC as we will be hit hard by the Russians once they control the entire gas supply. It will take years to build the Nuke powert stations and NS oil is running low. Coal will be king once more--for a decade or so at least. At least you can burn coal for fuel whereas gold is nice to look at.

What happens when they start manufacturing AU by atomic reconstruction?

Synthesis of noble metals refers to the realization of the age-old dream of alchemists—to artificially produce noble metals. The goal of this could be to achieve greater economic gain when compared to traditional methods of obtaining noble metals. Synthesis of noble metals is only possible with methods of nuclear physics, either using nuclear reactors or by particle accelerators. Particle accelerators require huge amounts of energy, while nuclear reactors produce energy, so only production methods utilizing a nuclear reactor are of economic interest.

http://en.wikipedia.org/wiki/Gold_synthesis

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.