Subscribe

feed image

Our FX reports

Adam Solomon's insight into business and corporate FX issues.
Your Questions on foreign exchange sent direct to the professionals.
The Economy News brings you the latest foreign exchange rate news.

FX Latest

Check Exchange Rate


Bank rates source: Exchange Rates

TorFX Corporate FX solutions

INSIGHT

Forex markets await the stress test
Mark Deans at MoneyCorp gives his morning verdict on the forex markets.Read more...
Standard Chartered warn of increased likelihood of double dip recession
Standard Chartered researchers say premature fiscal tightening could cause double dip recession....Read more...
Conservative dogma: The profound challenges of austerity
Why the Irish debacle of spending cuts is so important to Britain and dispelling the pro-austerity...Read more...
Israel vs Turkey: Concerns for the future of NATO
So what would be the consequences in the unfortunate event that Israel found itself in an armed...Read more...
Barclays: Not having a bank account costs £1000
A new report is issued by Barclays that looks at the challenges of increasing financial inclusion...Read more...
Home Forex Check Forex Rate Foreign exchange rates latest: Its all about the US Dollar
Foreign exchange rates latest: Its all about the US Dollar PDF Print E-mail
Written by Will Peters   
Friday, 19 February 2010 10:45
The Fed makes an unexpected call on the discount rate...


After the close of the US equity markets, the Fed made the surprise announcement that they were raising the discount rate from 0.5% to 0.75%.  

The move is certainly dominating main talk of the foreign exchange rate markets.

"Whilst this is not a change in Interest Rates to consumers, many will see this as the first step towards raising rates in the future.   The US Dollar reacted positively to this announcement, with the Dollar Index rallying against the other major currencies," reports an analyst note from ODL Markets.

The Euro Dollar exchange rate


Caxton Fx have the following notes on the most widely traded currency pairing:

  • The euro erased early gains against the dollar yesterday, eventually slipping 0.6% lower following a surprise move from the US Fed.

  • The euro was able to post early gains amid speculation the Swiss National Bank sold the Swiss franc in an effort to cap the currency's strength. The Swiss central bank has intervened at least three or four times this year to weaken its currency.

  • The dollar also lost some ground following an unexpected jump in weekly jobless claims, which dampened hopes for a fast recovery in the US labour market.

  • However, during the evening session, after the American stock market had closed, the Fed increased the discount rate by 0.25% (bringing it to 0.75%) in response to "continued improvement in financial market conditions."

  • Main interest rates are still expected to stay between zero and 0.25% over the coming months, though yesterday's decision certainly marks the start of policy tightening in the US.

  • The euro is now pressing a fresh nine-month low, with the price nearing $1.3450.

British Pound exchange rates in heavy falls


The British Pound is enduring fresh losses in light of the current state of the UKs fiscal position.

The pound euro rate and the pound dollar rate are both sharply lower in morning trade in London.

The GBPUSD is 1.645% lower with 1 GBP = 1.5364 USD.

The GBEUR is 0.748% lower with 1 GBP = 1.1387 EUR.

"The British Pound exchange rate declined heavily against the U.S Dollar yesterday, falling to a low of $1.5373 during the Asian trading session. The UK currency also lost 1% versus the Euro, amid speculation that the UK's fragile economic recovery will trail that of the U.S, as Britain recorded its first budget deficit for January since monthly data began in 1993," reports Adam Solomon at corporate FX specialists TORfx.

Government spending exceeded revenue by 4.3 billion last month and the Pound fell after the release showed Britain failed to generate a surplus in the biggest tax collection month of the year, as the health of public finances around Europe attract investor scrutiny.

James Knightly, an economist at ING Financial Markets, said that "this is potentially very worrying. Given concerns about public deficits around Europe at the moment, this could put the UK back in the spotlight."

Barclays bank also downgraded their view of the British Pound in light of the fiscal position the UK finds itself in.

The British currency will trade at $1.53 and 88 pence per euro in three months and $1.67 and 84 pence in 12 months, Paul Robinson, a foreign-exchange strategist at Barclays Capital in London, wrote in a report today.

Barclays had predicted the pound would end the year at $1.73.
Last Updated ( Friday, 19 February 2010 10:48 )
 

Get a quote today for your corporate FX solutions