As the Conservative party conference kicked off this week, the optimism was in stark contrast to the depressed state of the UK economy. The pound has remained at stable, albeit low levels this week, trading at in the region of 1.59 against the US dollar and 1.08 against the euro. Both the Bank of England and ECB voted to leave interest rates on hold, while the US dollar has risen against the yen as the Fed moves towards an exit strategy.

Sterling exchange rates have remained low this week, falling slightly against the euro and US dollar following weak economic data in the UK. The pound began the week on a bad note after UK industrial production figures fell -2.5% in August, while manufacturing sunk by -1.9%. House prices however continue to rise, with Halifax figures showing a 1.6% rise in September and the Bank of England voted to leave interest rates on hold.

The US dollar has retained strength this week as markets retain a sense of cautious optimism over economic recovery. Currency rates for the greenback fell early in the week as the dollar's relationship to oil trading were called into doubt. Later in the week the dollar shrugged off this uncertainty and oil remains in the region of USD69 a barrel amid growing demand from the Asian economies.

The US dollar has completed three consecutive weeks of gains against the pound and is heading for its largest gain in two months against the yen. The US trade balance is out this morning and we could be due for some more dollar volatility as the Federal Reserve proceeds with an exit strategy.

Euro currency rates have remained high this week, riding a wave of euro confidence as figures continue to indicate recovery in the eurozone. The single currency has been trading in the region of 1.47 against the US dollar and 0.92 against the pound and economists are predicting there could be a euro correction at some stage.

This week second quarter GDP figures came in at -0.2% for the eurozone, a downward revision from estimates although this failed to dent euro exchange rates. The Swiss unemployment rate came in at 4.1% and the service sector for the region came in at a positive 50.9, indicating expansion in the last month.

Australian and New Zealand currency rates have received a boost this week, reaching annual highs against the US dollar after Australia raised interest rates to 3.25%. Australia is the only developed country to have escaped posted growth in the first half of the year and rates are expected to continue to edge their way upwards to 4% from the "emergency" 3% levels.

So it seems we are on a stilted road to recovery, with economic data continuing to show improvement over the summer months. Sterling exchange rates remain the lowest of the major currencies although economists are predicting the pound could correct in future. At present, however UK data remains somewhat volatile, showing the economy is struggling to gain a consistent hold on recovery.

So while volatility is expected to continue, be sure to get yourself registered with Currency Solutions for currency transfer. Out personal currency brokers will monitor the markets on your behalf, ensuring you get the best exchange rates to make the most of your currency transfer. To see how much you could save, phone us on 0207 740 0000 or visit www.currencysolution.com.

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After a spectacular performance against the Aussies in the Ashes this summer, the England cricket team has followed this up with a crushing defeat in the NatWest series, losing 6-0 to their antipodean counterparts. This performance unfortunately, has not been limited to the pitch and the pound has sunk to a decade low against the Australian dollar this week, on the back of weak economic data.

This week has been awash with market data, leading to exchange rate volatility for all the major currencies. The US dollar lost ground and the pound slipped even further against its major currency partners, while the major winners have been the euro, Aussie and Kiwi currencies.

In the UK this week negative economic data has kept sterling under pressure. Inflation continues to fall, hovering around 1.8% and unemployment rose to 2.47 million, or 7.9%. The Bank of England predicted that inflation will continue to decline into late autumn and further stimulus could be necessary in the UK. Retail sales were also flat, rising just 0.2% on the month and the level of public sector borrowing increased to GBP16.1 billion.

This downbeat news conspired to push sterling exchange rates lower, with the pound declining as low as 1.10 against the euro and reaching decade lows against the Australian and New Zealand currencies. The UK appears to still be struggling to gain a foothold when it comes to recovery, and the suggestion that inflation will continue to fall until late autumn means we can expect currency transfer rates for the pound to remain bearish until then.

In the US figures have been much more positive. Retail sales leapt ahead of market expectations as the Fed's "cash for clunkers" initiative boosted new vehicle sales by 5%. The Philadelphia Fed manufacturing index rose and signs of recovery led exchange rates for the US dollar lower as risk appetite rose in the market. Building permits and housing starts also improved, fuelling optimism in the US.

The major benefactor of this good news has been the euro. The single currency has rallied this week, climbing over 2.5% against the US dollar and reaching its highest level in months against the pound. ZEW economic sentiment surveys came in positive for Germany and the Eurozone, while the European Commission predicted the region would grow in the third quarter. Inflation in the eurozone is currently at 1.3%.

Elsewhere, the New Zealand currency is heading for its largest rally since 1999 against the US dollar this week, fuelled by a surge in market confidence. Japan opted to leave interest rates on hold at 0.1% while Turkey continued to reduce theirs to 7.25%. The Canadian and Australian dollar exchange rates have also remained firm, buoyed by higher commodity prices and economic optimism.

So this week the barrage of data has led to a see-saw between risk appetite and risk aversion for currency exchange rates. This proves that volatility is alive and well in the market and it may continue as the road to recovery is expected to be long and rocky. If you need to transfer currency internationally, don't leave yourself at the mercy of currency volatility. Currency Solutions have personal currency brokers who will monitor the markets on your behalf and provide you with up to the minute information when it comes to currency exchange. To see how much you could save, give us a call on 0207 740 0000 or visit us online at www.currencysolutions.co.uk

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Well, after reports of Armageddon taking place on 09/09/09 it seems we are still alive and kicking. With no big bang, no outbreak of swine flu and no apocalyptic end to life on earth, we were condemned to yet another lacklustre day in foreign exchange markets, with the pound sinking even lower against the euro.

This week has been relatively uneventful in the currency markets, with economic figures providing little to write home about in the way of market movements. It seems economies around the world are gritting their teeth and getting on with the tough business of economic recovery and currency rates remain within recent ranges. At this stage, many of the major central banks are biding their time, waiting until recovery is sustainable enough to withdraw their emergency funding and the verdict, for the Bank of England, ECB and Federal Reserve at least, is not yet.

In the UK this week industrial and manufacturing production figures for July surprised markets positively, gaining 0.4% and 0.9% respectively in the last month. This sent sterling exchange rates briefly higher against the pound and US dollar, rising to around the level of EUR1.14 and USD1.65. The FTSE had a strong week, as did equity markets around the world with the MSCI index gaining ground from higher corporate earnings and increased commodity demand from China.

The Bank of England voted to leave interest rates on hold at 0.5% for the sixth consecutive month, and maintain the current commitment to GBP175 billion worth of quantitative easing. This had little affect on sterling exchange rates as it was in line with market expectations, although the weak retail sales figures and downbeat OECD predictions have also contributed to pressure on the pound this week.

In the eurozone the green shoots of recovery continue to show, with France recording improved industrial production in July. The German trade balance was little changed largely due to improved export levels and the outcome of the G7 meeting showed benchmark interest rates for the major economies are expected to remain on hold until 2010. The euro/dollar exchange rate remains firm above 1.44 at present and economists are predicting the euro could strengthen further as the recovery process gains a firmer foothold in Europe.

For the US dollar, currency rates have been relatively sensitive this week, losing over 1% to the euro and touching on a two-week low against the pound. The Fed's beige book was published with an overall tone of guarded optimism, as the pace of decline appeared to be contracting in most of the regions the economic snapshot covered. US equities have been strong due to rising demand from China, although the Fed remains cautious over recovery prospects.

Elsewhere, central banks in South Korea and New Zealand opted to leave interest rates on hold and Australian unemployment rate remained flat at 5.8% despite the economy shedding 27, 100 jobs this month. In eastern Europe the Czech inflation rate is falling, coming in at 0.2% in August, a decline of over 7% from a year ago.

So all in all, the global recovery is proceeding as expected by economists; rocky. Traders are still highly sensitive to risk in the market and any signs of recovery, good or otherwise usually lead to movements in currency exchange rates. The pound, Australian, New Zealand and Canadian currencies often gain ground when market confidence is high, and tend to trim these gains when risk appetite diminishes.

As the recovery process continues, the economic forecast is expected to remain rocky and volatility will remain a feature of currency markets. For international currency transfer, your best bet is to use a foreign exchange specialist. Currency Solutions provide personal currency brokers who can monitor the markets on your behalf and provide you with up to the minute information. This will help you capitalise on peaks in the currency market and reduce your exposure to currency risk. To see how much you could save, call us on 0207 740 0000 or visit us online at www.currencysolutions.co.uk.

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Now that Wimbledon is over and tennis news has been relegated back to the sports pages, you might have missed the news that Andy Murray has made the third round in the US Open at Flushing Meadows. Due to face Nadal in the semi-final, hopefully Murray fares better than the pound has against the euro this week, as sterling has fallen to its lowest level since January 2009 against the single currency.

This week it has emerged that the race is on for global recovery. While there is data to suggest that things are improving gradually, economic sentiment remains weak in the world's major economies and vulnerable to risk aversion. Following a bumper summer the rally in equity markets has slowed, replaced by fears that it might have outpaced actual economic growth and this is leading to currency volatility at present.

This week sterling exchange rates have remained deep in the doldrums. The pound touched on its lowest level since January 2009 against the euro, coming under pressure from weak economic sentiment. Downbeat manufacturing statistics pushed sterling even lower, as figures revealed the manufacturing sector contracted in August. Later in the week positive construction and service sector PMIs allowed sterling to trim losses, recovering from multi-month lows to reach 1.63 against the US dollar and 1.14 on the euro.

Euro exchange rates have remained strong, advancing on the pound this week as evidence mounts of a eurozone recovery. Figures from the EMU construction, service and manufacturing sectors all supported the view that the eurozone is on the road to recovery, and the single currency held above 1.42 on the US dollar and 0.86 against the pound.

The ECB voted to leave interest rates on hold at 1% and President Trichet reiterated concerns over a lagging labour market. The ECB is also expected to revise growth forecasts for the rest of 2009 upwards, after Germany and France emerged from recession. In Poland, the budget deficit is set to widen a full 1% of GDP in 2010, rising to above 7% disrupting plans for euro adoption. Russia's manufacturing sector has also expanded for the first time in eleven months.

In the US the Federal Reserve voted to leave interest rates on hold, and the FOMC minutes noted that the US economy is on the road to recovery. US factory orders rose 1.1% and the manufacturing sector expanded, largely due to the Fed's "cash for clunkers" policy which has boosted the auto manufacturing industry. The US labour market remains a concern, and rising unemployment figures could trigger another wave or risk aversion.

Also this week the Australian economy surprised markets by expanding by 0.6% in the second quarter, sending the Australian dollar higher against its international counterparts. The Australian dollar remains subject to international risk appetite and an interest rate rise is predicted for the country as soon as November 2009.

So while we are seeing the emergence of a nascent recovery, there is still significant currency volatility as markets remain sensitive to shocks. The race is on for global recovery and the downbeat sentiment regarding sterling is a reflection of the comparatively weak data we have seen from the UK.

If you need to transfer currency, fluctuations in the exchange rate can make a significant difference to the value of your investment. For the best exchange rates and a more personal service when it comes to currency transfer, speak to your broker at Currency Solutions. They can provide you with up to the minute market information and flexible trading options to help you capitalise on market volatility. Registration is simple, free and takes just a few minutes. To see how much you could save, phone us on 0207 740 0000 or visit www.currencysolutions.com

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In an economy that seemed it could not get much worse, sterling has continued to surprise. With currency exchange rates for the pound resembling a slow moving car crash this week, the euro has streaked ahead like Usain Bolt, driven forward by evidence of recovery in the German economy. US sentiment is slowly but surely turning more positive, while international currency exchange rates remain sensitive to risk in the market.

This week negative data in the UK has led the pound lower against the single currency in the longest losing streak since January. In a week that has been relatively light for UK data, the good news is that house prices rose, leaping the most in over two years to gain 1.6% on the month and business confidence improved, reaching 4.8 in June.

The bad news for sterling has been the record budget deficit and the comparative euro strength which has pushed bond prices to record lows and kept sterling sentiment weak. Sterling exchange rates fell to a multi-month low against the single currency, and are currently trading around 1.13. Though economists are predicting a market correction, when this will occur is uncertain and for now, having up to the minute market information is essential for euro/sterling transfer.

In the US, markets opened optimistically this week as president Obama re-appointed Ben Bernanke for a second term as chairman of the Federal Reserve. Bernanke is widely credited for bailing the US economy out of the financial crisis and this move was regarded as positive by markets sending the US dollar higher against its currency partners. Consumer confidence also rose to a three-month high, while durable goods orders improved 4.9% on the month, slightly below market expectations.

US GDP figures also released this week confirmed the US economy contracted -1% in the second quarter, while jobless claims continue to rise. Economists are predicting the US will return to growth in the third quarter of 2009 while unemployment may rise as high as 10%.

The euro has been the major winner in terms of currency exchange rates this week, driven higher by strong data from the German economy. After unexpectedly ending their recession in the second quarter, Germany's consumer confidence reached a three-year high, while the IFO business climate and expectations exceeded market estimates. This is likely to help lift the rest of the eurozone and the UK out of recession and euro exchange rates climbed to over 0.88 versus the pound, while holding ground at 1.42 on the US dollar.

In other currencies, the Australian and New Zealand dollars received an initial boost after the reappointment of Bernanke, and another following news that Australian business investment rose 3.3% in the second quarter. The Japanese yen has retained its strength this week, as uncertain equity markets in China, as well as falling export levels, inflation and the pending election in Japan boosted demand for the safe haven.

So while it appears we are on a shaky road to recovery, the good news has not quite extended to the UK economy just yet. Currency exchange rates remain subject to market volatility and to get the best exchange rate, it is worth having a personal broker monitor the markets on your behalf. At Currency Solutions, our personal currency brokers provide you with up to the minute information and can watch the markets on your behalf, helping you save time and money with currency transfer. To see how much you could save, call us on 0207 740 0000 or visit www.currencysolutions.com.

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Commentators have been left awed this week as Usain Bolt smashed the world 100m record and Andy Murray became the first Brit ranked at number 2 in the world after cruising to victory in Montreal. Yet while most of the record breaking has been left to the track, we have also seen some new highs and lows in the way of financial data.

The general consensus at present is that the global recovery is still 'on', though investors seem to be see-sawing between optimism over recovery and handwringing over its sustainability. This week has been relatively quiet on the data front with the euro continuing to trade at firm levels, while sterling sentiment remains downbeat.

In the UK, the release of the MPC minutes revealed the Committee was split 6-3 over its currency QE policy. Governor Mervyn King and two others voted to QE by GBP75 billion, but were outvoted as the MPC opted to inject a further GBP50 billion into the economy. This came as a surprise to investors and led to downward sterling pressure as it showed MPC members are still unclear over the depth of recession, and the best way out of it.

UK retail sales also rose 0.4% in July - a 14 month high - and inflation came in at a surprisingly resilient 1.8%. This indicates a robust retail sector which is good news for the pound. Sterling sentiment was dampened however, by the budget deficit which showed a GBP-8 billion deficit, the highest since 1993.

In the eurozone thing have been slightly rosier, with the single currency trading at firm levels in the absence of major data. German investor confidence rose to a three-year high, reinforcing the view that recession is easing and the euro has remained in the region of USD1.42 and GBP0.86.

Positive news in the eurozone has helped to bolster eastern European currency exchange rates, with zloty climbing 4.5% against the euro in the last month. However the region remains deeply affected by recession, with retail sales in Russia sliding by -8.5%, the most in over a decade.

US jobless claims were more negative than expected, edging the dollar higher against the euro and pound as the number of new claims rose by 576,000 in the week to August 15. Leading indicators also came in at an underwhelming 0.6% and the Philadelphia Fed showed only a modest improvement in manufacturing.

In other currencies, the Australian and New Zealand dollars fell mid-week, following concerns over Chinese stocks, though they have since recovered this ground. The Canadian dollar also rose against the greenback following strong inflation data, supporting the central banks view of rate hikes in future.

So while foreign exchange markets have entered a period of greater stability, the path to recovery is likely to remain uncertain. When it comes to currency transfer, Currency Solutions provide you with excellent exchange rates and a personal currency broker to help you save time and money. To see how much you could save, send us an enquiry today www.currrencysolutions.com.

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After the English cricketers crumbled against Australia in the fourth Ashes test, sterling seemed to follow suit with the pound crumbling against its currency partners early in the week as downbeat labour data reinforced the negative view of the UK economy. Whether the pound or the cricket team will rise phoenix like remains to be seen, leaving both economists and cricket fans with a nervous wait.

Internationally, markets this morning are buoyant with optimism as recent figures suggest the major economies could be through the trough of recession. The Federal Reserve voted to leave interest rates on hold, while the French and German economies grew in the second quarter, technically ending their recession. It is just sterling that remains in the doldrums, under pressure from more negative data this week, though we may see an upturn in third quarter statistics.

This positive news has led to a rally in risk appetite this week, with the usual suspects - AUD, NZD, EUR - rallying against the yen and greenback. Commodity prices and equities also received a boost, as improved growth prospects mean demand for energy is set to continue.

In the UK this week the official unemployment rate came in at 7.8% or 2.44 million, reaching its highest level in 15 years. The Bank of England quarterly inflation report revealed a downbeat economic forecast and trade statistics show the deficit widened even further in June. This affected sterling sentiment, capping the pound's potential and confining it to slim ranges against the euro and US dollar this week.

The week has been packed with US data, causing a bout of volatility for US exchange rates. The FOMC decided to leave interest rates on hold, and noted that they will remain low for an "extended period" while markets continue to recover. The US trade deficit also soared to a whopping USD1.27 trillion reflecting the decline in exports and heavy government borrowing.

The euro has rallied this week, boosted by the unexpected news that the French and German economies grew by 0.3% in the second quarter. This ends their recession although euro area GDP shrunk by -0.1%. The situation in eastern Europe remains weak with the second quarter bringing deepening recession to Hungary and Romania. Poland is still yet to enter recession and the zloty advanced this week on the back of positive German growth data. Bloomberg has currently positioned zloty as one of the top performing emerging market currencies.

Positive news this week has added to the view that the tide of recession is beginning to turn. Economists are eager to stress that recovery could be weak, stilted and come from a very low base but the positive news has helped to boost market sentiment. This has driven exchange rate advances for the higher yielding currencies, notably the euro, aussie and kiwi dollars against the yen and US dollar.

Yet while markets and currency exchange rates are still particularly sensitive to data releases, an undercurrent of risk trading remains. For the best exchange rates and information when it comes to currency transfer, get yourself registered with Currency Solutions. Our personal currency brokers will monitor the markets on your behalf and ensure you get the best exchange rates in your required time frame.

Currency Solutions are experts in foreign exchange and money transfer. Learn more here.

It seems like sterling has taken cues from Freddie Flintoff recently, as sparks of brilliance in its performance have been undermined by general concerns about health. And like the cricketer, while the UK economy has shown promise recently, whether it is 'match fit' for recovery remains to be seen. The MPC seems to doubt it and have opted to expand with QE, though modest improvements in manufacturing and services sent the pound to 2009 highs against the US dollar.

The unexpected news that the UK could be on the road to recovery boosted sterling exchange rates this week as confidence drove risk appetite. The US dollar was sent to the lower end of ranges and markets have been occupied with a glut of important economic data, including interest rate decisions from the Bank of England and European Central Bank.

In the UK, manufacturing, services and the property sector all reported unexpectedly healthy figures this week, with production expanding and house prices rising for the first time since recession began. The confidence this engendered in the pound drove sterling exchange rates to 1.69 against the US dollar and 1.18 against the euro, as the pound broke out of recent ranges amid market optimism.

The Bank of England has also decided to leave interest rates on hold at 0.5% for the fifth consecutive month, while pumping another GPB50 billion into the economy. The MPC is now utilizing the full extent of the funds approved by the Treasury to stimulate the UK economy and sterling exchange rates dipped slightly following the decision.

The US dollar has remained in low trading ranges this week due to the rally in market confidence. Following positive GDP figures last Friday where the economy contracted by 1%, the US economy has continued to show modest signs of improvement. This week construction and manufacturing sectors have reported minor gains. Personal consumption figures were down more than expected, although this failed to dent risk appetite as positive news in Europe and Asia kept the US dollar confined to low ranges.

Euro exchange rates climbed over 1% against the US dollar this week, rising to around 1.44 amid the upturn in global growth. The European producer price index rose 0.3% this month, however retail sales fell by -0.2% and France's largest bank Societe Generale, reported a 52% profit drop in the second quarter. The ECB also voted to leave interest rates on hold at 1% with President Trichet confident that the rate is 'appropriate' for continued growth in 2010.

In Eastern Europe the Czech central bank trimmed the base rate to 1.25%, with economists noting the cut is a 'safety measure' to ensure further easing prevent the appreciation of the koruna. The Czech economy is on track for the worst contraction in more than a decade. The Polish government decided to drop euro adoption plans for 2012 in the interests of greater economic stability. While Poland has avoided recession thus far, the zloty remains under pressure from falling revenue and a higher budget deficit.

So while we have seen a return to extreme currency volatility, this time it has been in favour of the pound and euro against the US dollar. Sterling rose to its highest level in 10 months against the US dollar, while the Australian and Kiwi currencies also touched on 12-month highs amid the improved market confidence.

If you need to transfer currency, taking advantage of these spikes in the currency market can make a significant difference to the amount you end up with. To ensure you capitalise on market volatility, speak to your broker about your currency requirements and they will call you at the best time to trade. To open an obligation free account, visit us online at www.currencysolutions.co.uk.

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As the musical chairs of the transfer season continues, we are seeing some volatility that is set to rival currency exchange rates. Much like Manchester City is throwing money at their team and hoping it gets better, many central banks appear to be doing the same, with no-one really knowing when a bona fide economic recovery will begin.

The good news is though, is that it does appear to be starting to happen. Business and consumer confidence in the UK and eurozone have reached levels not previously seen this year and property prices are starting to recover. While this doesn't make up for the shortfall in industrial production, the pace of decline in this area seems to be slowing as well. In terms of currency exchange rates, risk appetite remains the dominant theme as a glut of data from the second quarter has left investors searching for signs of recovery.

Late this week sterling rose to 1.64 against the US dollar, boosted by the rise in house prices in the UK. Nationwide reported that property prices gained 1.3% on the month and mortgage approvals rose to their highest level in 2009. This 'correction' could be due to greater stability in the banking sector, as buyer interest is piqued by low property prices and interest rates. A Bank of England report this week also showed credit conditions were easing and Chancellor Darling added pressure to banks to increase lending levels to small businesses.

The US and China remain global drivers or risk appetite and economic sentiment. Worse than expected consumer confidence figures in the US caused a spike in risk aversion this week and the rest of the market has been relatively quiet in anticipation of quarter two GDP figures released on Friday. This data will impact on currency exchange rates and whether it is the safe havens or higher yielding currencies that benefit, is entirely dependent on the results.

In the eurozone, German inflation rates are falling and unemployment remains static at 8.3%. Consumer and business confidence for the region rose after Spain, Italy and Germany all reported improved business conditions. This has supported the euro throughout the week, above 1.40 against the US dollar and around 0.85 to the pound. The ECB announced that they expect the eurozone to fall into a short period of deflation before inflation returns to the 2% target.

A 6% rally in zloty this month has made it one of the best performing currencies against the euro, as foreign investment floods back into Poland following global optimism over global recovery. Poland is still one of the only economies to escape recession. The Hungarian central bank voted to reduce interest rates to 8.5% and this weakened the forint. The Australian dollar made a comeback to rival Michael Schumacher, climbing to a 10-month high against the US dollar while the New Zealand dollar weakened amid the prospect of ongoing rate cuts.

So while we are seeing more stability in currency rates recently, with market rallies sending currencies to new 2009 highs, risk aversion still remains a strong and unpredictable force in the market. If you need to transfer currency, timing your trade to capitalize on currency volatility will make a significant difference to your investment. Currency Solutions have personal currency brokers who can monitor the markets for you, phoning you at the optimum time to trade. We now have an online registration facility so you can open a currency trading account at the click of a button. To see how much you could save, send us an enquiry today.

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Much like the elimination of Kevin Pietersen delivered a blow to England's Ashes campaign, the Fed's assessment of the US economy delivered a blow to risk appetite this week. Economists and investors were left wondering what was next for the global economy - and that was before the solar eclipse in Asia added to the confusion.

Whether we are heading towards the light or likely to be plunged further into darkness remains a source of contention at the moment. Accountants have predicted 2009 will be the worst year since WW2 for the UK, but retail sales more than doubled in June. Equity markets have experienced their longest rally in two years, but this was snapped by a downbeat assessment of the US economy. This varied mix of economic data is painting a messy picture, though it seems that tentative signs of recovery are emerging from an unstable base. This is leading to predominantly risk based trading, which is determining exchange rates for the major currencies.

Sterling exchange rates have travelled the length of their recent range against the US dollar this week, touching on 1.62 after the release of whopping government debt figures and rising to 1.66 following positive retail sales. Bank of England governor Charles Bean noted that the weak pound is aiding a UK recovery, with lower prices stimulating the export sector. While this tends to suggest sterling's decline is a carefully orchestrated ploy rather than the result of fiscal mismanagement, if it helps to get the UK economy on track, the Bank might just get away with it.

Minutes from the MPC meeting showed the committee unanimously voted to keep QE levels unchanged in July, deciding that further stimulus was not necessary. Government debt has risen to 56% of GDP, raising concerns that this could prove inflationary in future. New industrial orders dropped to their lowest level in 17 years and the CBI voiced concerns that manufacturing sector could suffer job losses in excess of 250,000 as a result.

US markets have been firmly fixed on one man this week: Ben Bernanke. As chairman of the Federal Reserve, Bernanke not only presided over the economy in the years up to the financial crisis, but is the chief architect of the bail out package. Bernanke gave a cautious assessment of the US economy this week, stating that while there are "tentative signs of recovery" the economy remains fragile and the Fed has no plans to tighten monetary policy soon. This fuelled risk aversion internationally, sending US dollar and yen exchange rates higher at the expense of the pound, euro, Australian and New Zealand currencies.

The eurozone has been relatively quiet this week with the euro occupying a mid-range between the safe haven and higher yielding currencies. The euro climbed to 1.42 against the greenback and has remained there, boosted by the corporate earnings led market rally. Credit Suisse is the latest bank to report a profit, posting a 29% surplus due to profits in trading and investment.

Polish zloty has climbed to a three-month high against the euro, led higher by the rally in Western Europe. Recession in Western Europe has hammered Polish exports and a recovery in the region would help stimulate Polish economy. The Australian and Kiwi dollars have also experienced high volatility this week, surging to multi-month highs and lows on the back of risk trading.

I'm afraid this week the advice remains the same: if you need to transfer currency, use a currency specialist. At Currency Solutions we provide you with personal currency brokers who will monitor exchange rates on your behalf and phone you at the best time to trade. This can help eliminate exchange rate volatility, and give you excellent exchange rates for currency transfer. To see how much you could save, send us an enquiry today.

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Foreign exchange markets are taking more twists and turns than the Tour de France recently as the uncertain state of the economy means it is difficult to know what is around the next corner.

This week has seen the soccer transfer season begin and the continuation of the Ashes at Lord's, which has helped some of us overlook the fact that the economy is blundering on, but that someone seems to have forgotten the sat nav.

There has been a return to risk trading this week and appetite has yo-yoed, bringing with it the usual results for the major currencies. Market focus has been fixed on the bottom line with consumer price inflation and corporate earning figures due in the US. The upshot of this data is that while people seem to be spending less, with unemployment record breakingly high, banks have returned to operating profitably, which serves as good news for the financial sector.

This week we learned the UK unemployment rate hit 7.6% with a further 281,000 people losing their jobs in the second quarter. This is the highest rate in 12 years and unemployment is expected to keep rising throughout 2009. The annual inflation rate has fallen to 1.8%, while consumer prices rose 0.3% on the month to June. This is positive news for the Bank of England as it is the first time in 21 months inflation has fallen below the 2% target.

Despite the negative employment statistics, sterling exchange rates have remained within recent ranges as the pound was buoyed by positive news from corporate America. Sterling is currently trading in the vicinity of 1.63 versus the US dollar and 1.16 versus the euro.

Corporate earnings have been the major news in the US this week, with Goldman Sachs, JP Morgan and Intel all reporting second quarter profits. The surge of confidence this created triggered a greenback sell off, reducing exchange rates for the yen and US dollar.

However with the FOMC minutes failing to convince markets of recovery and the Fed's balance sheet looking sky-high, risk aversion remains just around the corner. The Philadelphia Fed results showed manufacturing continues to shrink and core inflation is running at 0.2%.

In the eurozone, the German ZEW economic survey was distinctly more downbeat than markets predicted while industrial production across the euro area is running at an annual rate of -17%.Consumer prices for the eurozone also fell 0.1% this month, falling into negative territory for the first time, dragged down by deflation in Germany and Spain.

Eastern European inflation figures show that none of the prospective euro area nations have inflation rates low enough to join at present. Across the region wage growth is slowing, falling 2.5% in Hungary in May. At present Poland remains the only eastern European nation to avert a recession and GDP expanded by 0.8% in the first quarter of 2009. As a regional comparison, Hungary's GDP shrunk by 6.7%, the Czech Republic by 3.4% and Slovakia by 5.6%.

At present uncertainty still abounds and it is unclear whether we are on the way up, down or just treading water at this stage of the recession. The fact that corporate giants in America have returned to making a profit, for the first time since 2007 in the case of JP Morgan, has improved market confidence and the sense of stability. However there is still a large proportion of traders and economists who are uneasy with the global situation and this may lead to a revival of risk trading over the coming days.

If you need to transfer currency, you know the best bet is timing and the right information so get yourself registered with Currency Solutions and have a broker watch the markets on your behalf. They will be able to help you get the best possible exchange rate, saving up to 4% against your bank for currency transfer, as well as helping to reduce your currency risk.

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Have a good weekend.

While Michael Jackson's funeral and the government's new banking regulations seemingly have little in common, style triumphed over substance in both cases this week as key points were conveniently glossed over to provide something more palatable to the public. In contrast, financial markets have been much less spectacular as downbeat data has sent currencies to the lower end of trading ranges.

Sterling exchange rates have been testing key support levels this week, falling to 1.60 against the US dollar and 1.15 against the euro following weak economic figures and ahead of the Bank of England interest rate decision.

Industrial production and manufacturing levels fell by -0.5% and -0.6% in the UK, in contrast to the 0.2% rise markets were expecting, and this caused drop in UK confidence early in the week. Halifax house prices also fell 0.5% in June, reversing some of May's 2.6% gain. The Bank of England voted to leave interest rates unchanged, and opted not to increase QE levels as recommended by the BCC. The UK trade deficit narrowed to a three-year low as the weak pound and reduced demand has lowered import levels.

This week euro currency exchange rates have benefitted from news that German factory orders rose by 4.4% and consumer inflation rose by 0.4% on the month. Eurozone GDP also fell by -2.5% in the first quarter and as this was roughly expected by markets, it failed to dent euro support too much. In Eastern Europe the Polish zloty gained its most in a week against the euro after the Polish finance minister commented that Poland may be stable enough to join the euro adoption process in the latter half of 2009.

US markets have been relatively flat this week, although risk aversion has pushed the US dollar to the top end of ranges against its currency partners. The G8 summit has been the focus of international media and the dollar's reserve status is likely to be debated here.

More good news has come from the Australian economy with consumer confidence rising a whopping 9% in July. The unemployment rate also came in better than expected and the RBA voted to leave interest rates on hold, making the Aussie attractive on the basis of rate differential when confidence returns to the market.

There is growing debate at present over whether more government support is needed and what form this should take. Economists are also coming up with ever more elaborate shapes to describe the recession. Is it a V, U, W, saxophone, or small child standing with balloon? The truth is that no-one knows and this uncertainty is favouring the US dollar and yen at present, at the expense of the higher yielding currencies.

For currency transfer, your safest bet is still to have the right information. This will provide an insight into what the markets might do and could help you take advantage of peaks in the market. Personal currency brokers are a brilliant source of this information, so if you haven't already got one, get registered with Currency Solutions today.

Have a good weekend.

While Wimbledon has dominated the sports pages, the Federal Reserve has held the financial pages to ransom this week as investors prepositioned themselves for, and digested results of the US interest rate decision. With the Fed failing to either raise rates or commit more funds to quantitative easing, currency exchange rates ended up little changed, as markets sighed a collective "hmmmm" and contemplated recovery prospects in the global economy.

And this is where the jury is still out. This week the OECD has suggested that the recession is bottoming out, yet negative data continues to flow from the major economies, illustrating that they are still firmly entrenched in recession territory.

Although this is partly due to the time lag in data releases, with many first quarter statistics at odds with more positive figures from May and June, it is still fuelling uncertainty and despite summer being in full swing, many economists are yet to be convinced we have seen green shoots of recovery.

The UK has been light for economic data this week, with the eyes of investors firmly fixed on the US interest rate decision. The CBI survey showed a worse than expected outlook for retail sales and the upward trend in sterling exchange rates has stalled following three months of gains. The OECD forecast a 4.3% contraction for the UK this year with zero growth in 2010. This, combined with Bank of England governor King's recent comments on the "uncertain" state of the economy have reduced sterling support, although the pound remains supported at 1.16 against the euro and 1.60 against the US dollar.

The Federal Reserve opted to leave interest rates on hold at 0.25%. This was largely expected and the accompanying statement was of more interest to foreign exchange markets. The fed noted that interest rates are likely to remain low for an "extended period" yet neglected to expand on their quantitative easing programme. This roughly translates into 'things are not getting worse, but they are certainly not better' and the middle of the road policy failed to inspire confidence or panic in markets, meaning currency exchange rates generally kept within recent ranges.

The single currency has benefitted this week, capitalizing on its reserve status to gain on the pound and US dollar. ECB president Trichet commented that the bank would not be expanding their stimulus programme and individual governments should reign in their burgeoning budget deficits as this could threaten recovery in future. The ECB has also announced their first re-financing programme, adding EUR 442.24 billion to European banks and this news supported the euro against the dollar.

OECD predictions were distinctly downbeat for the eurozone forecasting a 6.1% contraction for Germany and industrial new orders have fallen ahead of market predictions. However despite this, confidence remains surprisingly high with the IFO German business index improving for the third consecutive month.

Elsewhere, demand for the higher yielding Aussie and Kiwi currencies has been subject to international risk appetite. The Czech central bank voted to keep interest rates on hold at 1.5% amid inflation concerns, despite predictions that the economy is to contract 3.4% in 2009.

At present the global economy remains in a state of uncertainty. While recently markets have rallied based on global confidence, lately this has been cast into doubt leading to a greater degree of risk aversion. For anyone conducting currency transfer, timing and the right information remain crucial. Currency Solutions has personal dealers who can act as your eyes and ears on the currency markets and help you make the most for your currency transfer. Give us a call to see how we can help with your currency requirements.

Have a good weekend!

This week has had something of a regal theme with the opening of Royal Ascot, Murray cementing himself as King of the Queen's tournament and even Bruno, the "world's most famous Austrian" donning Beefeater garb in London last night. However while the pound has had the reign of currency markets recently, this may be coming to an end with economists predicting a downturn in risk appetite.

Recently, as summer has crept into the UK along with some positive economic data, markets have been of the view that we may be climbing out of the gloomiest period since WW2. This sense of confidence has boosted currency exchange rates, particularly for the pound which has reached multi-month highs against its international currency partners.

This week however, a nagging sense of doubt over the strength of global recovery has emerged. As the BRIC nations expressed doubts over the dollars status as a reserve and second quarter statistics continue to show economic decline, investors began to weigh recovery prospects for the future against negative results at present.

This has led equity markets to stall following their three month rally, as concerns emerge over whether the financial sector has enough legs to stage a complete recovery.

This week in the UK retail sales figures declined -0.6% in May, dropping back after a bumper Easter trading. This was opposed to a predicted 0.4% increase and as retail figures are an influential statistic, has served to weaken the pound.

Minutes from the latest MPC meeting showed the short-term outlook is unchanged for the Bank of England despite recent signs of recovery. The official UK unemployment rate rose to 7.2%, although new jobless claims were less than the market expected.

These figures have resulted in a tapering off of the bullish trend in sterling. There is a growing view among economists that risk aversion has peaked and sterling could continue to decline if profit taking occurs, in combination with heightened risk aversion.

In the US, negative consumer price index figures have put an end to speculation over US interest rate rises and doubt still surrounds the fiscal health of the US economy. The BRIC summit depressed dollar support as Russia expressed doubts over the status of the US currency as the global reserve. Russia and China also pledged support for their national currencies through closer bilateral relations.

The G8 meeting had little in store in terms of currency exchange rates and the euro weakened slightly on the back of profit taking from investors. European payrolls declined by record levels in the first quarter, German ZEW economic confidence leapt to 44.8 in May and the EMU annual inflation rate is currently at 1.5%. Also this week the Swiss national bank left interest rates on hold at 0.25% and this strengthened the CHF.

In terms of the higher yielding currencies, the Aussie and Canadian dollars have sunk this week following declining commodity prices with the Aussie reaching a two-week low against the greenback. However, the recently upgraded Chinese growth rates, which have risen from 6.5% to 7.2% according to the World Bank, could spur demand for the commodity based currencies in future.

Following the recent rally in equities, improvements in currency exchange rates are tapering off amid profit taking from investors and a heightened sense of risk in the global economy. As currency exchange rates often hinge on confidence in the market, important data releases detailing the state of national economies can have significant affects on currency exchange rates. By gaining the services of a personal dealer, not only can they provide you with up to the minute information on factors that might affect your currency, but they can help you get the best exchange rates for currency transfer.

If you haven't already, get registered with Currency Solutions and ensure you get the best rates for all you foreign exchange.

Have a good weekend!

This week Sir Alan Sugar has a new apprentice and a new role, appointed by Gordon Brown - who only narrowly avoided being fired himself - as the UK's new "enterprise tsar". The UK has triumphed over the euro, and not just Andorra either, with the pound surging to its best exchange rate in 2009 against the single currency. And while currency rates have climbed, so too have the value of Ronaldo and Kaka, with the two footballers reportedly signing to Real Madrid for GBP80 million and GBP59 million respectively this week.

This week has been one of tempered optimism for international currency markets. Sterling reached its best currency exchange rate for 2009 against the euro, following a seven-month high against the US dollar recently. Internationally, markets have been awash with speculation that the Federal Reserve may raise interest rates in late 2009, although the USD has also been burdened by the weight of expectations and as a result, has suffered some downward pressure. The major winners of the week have been the higher yielding currencies, particularly the Australian dollar and pound, which seem to have cemented themselves as the currencies of choice when risk appetite is strong.

In the UK, disastrous results for the Labour party in the European elections drove sterling downwards as it appeared a leadership crisis was imminent for Labour. The pound plunged below 1.6 against the US dollar and 1.14 against the euro as a result of the political turmoil. After a crisis meeting, news that Gordon Brown had secured party support, for the time being at least, allowed sterling volatility to settle and industrial production figures triggered a bullish run for the pound later in the week.

UK industrial production rose in April, for the first time in over a year, adding to the view that recession is abating in the UK. With a rise also reported in manufacturing production, these figures drove sterling to its best currency exchange rate against the euro this year. The pound touched on 1.1722 before falling back to 1.1714 and rose to over 1.64 against the US dollar. The NISER is currently putting the UK economy on track for a return to growth in the second quarter of 2009, which would make the UK one of the first to exit the recession. While these figures are far from conclusive, they have boosted sterling exchange rates internationally and renewed optimism that Bank of England policies: devaluation of the pound, low interest rates and quantitative easing, have been effective in stimulating the UK economy.

The US dollar has suffered a rougher ride this week. Plagued by rumour and speculation, US dollar exchange rates have been subject to downward pressure over uncertainty surrounding the state of the US economy. Early in the week, speculation that the Federal Reserve would increase interest rates by the end of 2009 triggered a demand for riskier assets, boosting the pound, euro and Australasian dollar currencies. The announcement from treasury secretary Geithner that ten major US banks would repay government funds, lent to them in the height of the financial crisis, added to the opinion of growing stability in the US financial sector.

However, news that the US trade balance had fallen to USD -29.2 billion and Russia's central bank was considering transferring its dollar reserves into IMF issued bonds, capped the rise in risk appetite as it renewed fears the worst may not be over for the US economy. Although the fact that retail sales figures for May rose by 0.5% while jobless claims for June declined less than expected, have reignited risk appetite moving forward.

The week has been rather unremarkable for the euro exchange rate, which has suffered at the expense of increased optimism surrounding the UK economy. French industrial production contracted by a greater degree than expected, shrinking 1.4% in May. German industrial production was also lower than expected, in contrast to results for the UK and this added to the market view that the eurozone could take some time to emerge from recession. Also this week, the Standard and Poor's downgraded Ireland's credit rating to AA and the Swiss unemployment rate rose to 3.5%, both of which had a negative effect on euro exchange rates.

Around the world, from the US to New Zealand, property markets beginning to stabilise and this could help pave the way for economic recovery. This week the Kiwi dollar has gained the most in two weeks, following the RBNZ decision to keep interest rates on hold at 2.5%. The Australian dollar has also benefited from fewer than expected job losses and news that China is to increase spending on roading and infrastructure which would fuel demand for Australia's commodities.

So at present, while some economists are suggesting sterling is overbought and this is just one of many false dawns for the pound, this doesn't change the fact that recent days have brought the best sterling-euro exchange rate we have seen all year. This is also hot on the heels of the seven-month high the pound reached against the US dollar. As economies begin to haul themselves out of recession, these spikes may occur more frequently and be accompanied by an underlying bullish trend for many of the higher yielding currencies. Watch for gains in the Aussie, Canadian, New Zealand dollars and of course the pound, with the return of market optimism.

If you need to transfer currency, particularly pounds into euros, now is a better time than most. For the rest of your international currency transfer, remember to get your self registered with Currency Solutions and your personal currency broker will ensure you gain the best exchange rate within your time frame for currency transfer. Alternatively, set one of our stop loss or limit orders and trade automatically when the rate spikes in your favour.

Have a good weekend!

By Nigel Hodges of Currency Solutions

As the UK moves into the first days of summer, this week has been one of extremities. While temperatures soared across Britain, so too did the pound against the US dollar, touching on a seven-month high against the greenback.

As signs of global recovery are beginning to show, this week a growing divide has become evident between international economies. As one economist put it "there is some distinction between the walking wounded and those in greater disrepair". Economic sentiment is greatly affecting currency exchange rates at present and the fact that the Australian and Canadian economies are viewed in the former category has led them to an eight-month high against the US dollar this week.

Sterling exchange rates have also reached a seven-month high against the US dollar as confidence in global recovery becomes more entrenched. As more positive economic data emerges, there has been a diversification from risk trades which has benefitted the higher yielding currencies.

In the UK, PMIs for manufacturing and the service sector have improved significantly which has been positive for sterling exchange rates. House prices have risen 2.6% on the month and new mortgage approvals are also up, paving the way for recovery in the property sector. UK consumers reported their greatest level of optimism in six months and the pound touched on 1.16 against the euro, a level also not witnessed this year.

The picture has been somewhat different in the US. After the announcement of GMs "surgical" bankruptcy early in the week, economic data has conspired to keep dollar trends bearish. Mid-week, US housing data was better than expected and this boosted international currency exchange rates, although Thursday's negative employment data heightened investor nervousness in the run up to the official unemployment rate released on Friday. The minutes of the FOMC meeting had little effect on foreign exchange markets as interest rates remained unchanged in April.

News has been relatively quiet in the eurozone this week, allowing the euro to plow ahead bullishly against the USD and JPY. The euro reached a seven-month high against the dollar following news that the Australian economy grew in the first quarter of 2009 and the single currency has retained support above 1.42 against the US dollar.

The euro-sterling exchange rate is relatively unchanged from the 0.87 level with the pound having gained an edge on the euro due to the market perception that the UK economy is well positioned for recovery. Both the Bank of England and MPC opted to leave interest rates unchanged at 0.5% and 1% respectively and European retail sales rose for the first time seven months.

In eastern Europe, the Polish zloty has slumped 25% against the euro since July and the credit rating for Polish debt is currently regarded as less safe than the Czech Republic and Slovakia.

The Australian economy has surprised economists by reporting 0.4% growth in the first quarter, defying the recession that has dragged down the US, European and Japanese economies. Australian equities and currency exchange rates rose across the board with the Australian dollar reaching USD0.82, the highest level in eight months.

While the pound has reached highs not seen for some time against the US dollar and euro, there is a perception in the market that sterling is overbought and a natural correction may occur.

Still, that does not detract from the fact that for anyone selling sterling, this week was the best time in the last seven months to do so. That is, it was until cabinet resignations took their toll on the pound today and sent it rapidly down against the euro and dollar.

This volatility is a reminder of the importance of timing when it comes to currency transfer. As we see more evidence of global recovery, we may see the higher yielding currencies push higher trading ranges against the safe havens. If you have currency to trade, get yourself registered so you don't miss out.

Have a good weekend!

This week has been stressful for US bankers and Chelsea fans alike, as both have been subject to the most crucial of tests. Yet while the results of "stress tests" will leave some investors aggrieved, it is unlikely they will be as outraged as Chelsea fans after they came to the end of the road in the Championship League.

The bullish run in equity markets has continued as confidence in global growth prospects grows. Increasingly positive economic data, combined with receding fears over swine flu have boosted investor confidence and led to a greater distribution of funds outside the safe haven currencies. The Australian dollar and South African rand have been major beneficiaries with the Australian dollar reaching a 12-year high against the pound on the back of improved commodity prices.

After a bank holiday on Monday, UK markets hit the ground running with the FTSE surging to a four-month high within hours of opening on Tuesday. Throughout the week, equity markets went from strength to strength as improved global growth prospects fuelled risk appetite which translated into gains for most of the perceived "riskier" currencies.

Statistics from the British Banking Association show lending to small businesses increased by GBP270 million in March and the service sector PMI climbed to 48.7, an improvement from 45.5 the previous month. The Bank of England decided to keep interest rates on hold at 0.5% in line with market expectations and opted to expand their quantitative easing program by another GBP50 billion.

This news, combined with the market opinion that the UK is less deeply mired in recession than the eurozone has benefitted the pound. Early in the week, Sterling touched on a four-month high against the US dollar and has settled at a support level above 1.50 and 1.12 against the dollar and euro respectively.

In the US this week, headlines have been dominated by the pending results of "stress tests" on 19 of the major financial institutions. Recovery in the banking sector remains crucial to the economy as a whole and the stress tests are designed to test the solvency of the major US financial institutions. Ten of the 19 banks tested are in need of additional capital with Bank of America posting the worst results. Treasury Secretary Geithner has reassured markets that none of the banks are at risk of insolvency and this quelled investor fears, preventing a rise in risk aversion. Pending home sales and construction spending have both increased in March, leading to further speculation of green shoots in the US property market.

The euro has also been trading at firmer levels on the back of improved market confidence, despite the fact that green shoots do not quite extend to the eurozone. Economic figures here have been slightly more flat than those in the UK. Retail sales stalled at -0.6% in March and the merger between Fiat and General Motors could potentially threaten over 10,000 jobs. The ECB also voted to reduce interest rates to 1% in line with market expectations and agreed to EUR60 billion worth of quantitative easing to increase the supply of money in the economy.

Improved market confidence has also aided the distribution of funds throughout the eastern European currencies and economists are predicting zloty could be a major benefactor if the upward momentum continues. Zloty has declined in value by almost one third as investors dumped currencies they perceived as risky during market turmoil in late 2008. With the prospect of global growth becoming more apparent, zloty could be set to recover some of this ground. This week Poland has secured a USD20.6 billion loan from the IMF and the Czech central bank slashed interest rates to an historic low of 1.5%.

Market activity this week is beginning to show the emergence of a different picture. The bullish trend in equities has been sustained for around eight weeks now and the upward trend in sterling continues. Evidence that the slow down is slowing down in the world's major economies has increased the distribution of funds away from the two safe havens. If economic sentiment keeps improving, we may see trends in currency exchange rates diversify rather than slavishly following risk.

However, information is still the most crucial aspect when it comes to currency transfer. Whether for specific announcements or general currency trends, knowing what is happening in the market can make a significant difference to your investment. The 12-year high the Australian dollar touched on this week against the pound is evidence of this. By letting your dealer know your currency requirements they can monitor the markets on your behalf ensuring you get the best possible deal when transferring your currency abroad.

Have a good weekend!

Despite the papers depicting an Alistair in Wonderland type scenario with the announcement of the UK budget this week, there was no sugar coating those figures.

This week has been heavy on the data front with the UK in the international spotlight as the annual budget, inflation and unemployment figures were released. Despite pressure in the run up to Wednesday's budget, the pound has fared relatively well, keeping its chin above 1.45 on the dollar and 1.11 on the euro.

Internationally markets continue to oscillate between positive and negative territory according to the latest data released and this is dictating risk appetite and exchange rates for many of the minor currencies. This week the euro touched a 5 week low against the dollar, but later rallied on the back of positive economic news from the Eurozone.

In the UK, the annual budget announced an expected 3-3.5% growth contraction for 2009 with the budget deficit spiralling to an 'eye watering' 12% of GDP. Also among the headline grabbers was the 50% top tax rate and initiatives to revitalise employment, property and auto manufacturing markets. High tax rates have raised the issue of international competitiveness and led to criticism that top investors would simply leave their money offshore. The government also confirmed the view that a weak pound in the short term will give exporters a much needed boost.

Also affecting sterling exchange rates was the news that core inflation was 0% in February, taking the annual rate into negative territory for the first time. The MPC minutes showed the committee unanimous in its decision to maintain current interest rates and levels of QE and the official unemployment rate rose to 6.7%.

In the US private sector news has dominated, affecting the general trend in equities and risk appetite internationally. Corporate earnings showed Bank of America, Citigroup and Credit Suisse all turned a profit in the first quarter of 2009 triggering a wave of optimism over an emerging stability in the banking sector, albeit a very fragile one. So fragile in fact that the news write downs may be larger than predicted rattled market confidence and it took the reassurance of Treasury Secretary Geithner to put markets back into positive territory.

The Euro has been trapped in a bearish run against the dollar and pound for most of the week with public debates from members of the ECB and the perception that recession is becoming more entrenched in the Eurozone weighing on the single currency. The euro touched a 5 week low against the dollar but has rallied above 1.3 this morning on the back of positive (read: less bad) economic data showing the pace of recession is easing. German PMI's and EMU industrial new orders snapped months of record declines and the German ZEW economic survey illustrated a significant rise in economic sentiment.

This however, is not the case for Eastern Europe and the emerging economies continue to be battered by recession. The IMF forecast European banks could face more substantial write downs and require greater capitalization than US banks and has predicted a net loss of investment to Eastern Europe.

Economists are favouring short positions on Eastern European currencies. Moody's remains a strong presence in the international marketplace having downgraded the credit ratings of Latvia and Lithuania.

The Baltic region is home to some of the greatest casualties of recession with some of the economies transforming from the fastest growing in the region to the deepest contractions.

Elsewhere the Australian and Kiwi dollars and Japanese yen have been trapped within familiar ranges as currency exchange rates are subject to risk appetite. The news that Japanese exports have fallen, but not at record levels, strengthened the Yen.

Internationally the picture is of an emerging stability, albeit a highly tentative one.

News that is merely 'less bad' is now considered 'good' as markets have become somewhat desensitized to negative data. Sterling has regained some of the ground lost over the New Year period and seems to have a found a support level at 1.45 versus the Dollar and 1.10 against the Euro. While choppy ranges persist, particularly when it comes to the Eastern European currencies, it is worth letting your dealer know your requirements or setting a limit order to take advantage of market spikes when they occur. Let your dealer know your currency requirements and they will set one up for you.

Have a good weekend!

Ah, Easter. We're not going to try and kid anyone; as far as we're concerned, Easter is a chance for a long weekend spent stuffing our faces with chocolate.

Were we of a more religious bent, we'd be focussing on the weekend as a time for resurrection and rebirth.

But, frankly, that would seem almost inappropriate, since there's little sign of any resurrection in the US economy. In fact, notes from the last meeting of US Federal Reserve policy makers show just how downbeat they had become on the state of the US economy. It was this pessimism that led them to agree to spend more than $1 trillion to revive its fortunes. The minutes also revealed that the US economy had deteriorated more than policymakers had expected since the turn of the year.

However, despite the depth of the recession, the committee said that it expected recovery to begin in 2009.

Which is all very well, but there are no signs of a recovery just yet. According to figures from the Department of Labor, the number of people employed in the US fell by 663,000 in March. The jobless rate rose to 8.5% from February's figure of 8.1%, meaning it is still at its highest since 1983. It means that since the recession began in December 2007, 5.1 million jobs have been lost, 3.3 million of them in the past five months.

Things are bleaker still in the eurozone. Data from European Union statistics agency Eurostat has shown that eurozone industrial producer prices posted their biggest drop in annual terms for almost 10 years in February. The report heaps pressure on the European Central Bank to lower interest rates further in the months ahead, with factory gate prices dropping 0.5% on the month, leaving them 1.8% weaker than in February last year. The drop is the seventh consecutive monthly decline in prices.

Italian industrial production, adjusted seasonally and for the number of working days, has fallen 3.5% in February from the month earlier - a greater amount than expected - as investment goods slid, Istat said today. On the year, February's industrial production plummeted 20.7%, more than expected and compared with a downwardly revised 17.6% drop in January. The annual decline in February was the steepest since the index began in 1990.

The Netherlands' annual inflation rate was flat on the month at 2% in March, according to the Dutch Central Bureau for Statistics. A rise in the price of clothing was balanced by falls in the prices of fresh vegetables, diesel and energy. According to the European Harmonised Index of Consumer Prices, or HICP, Dutch inflation came in at 1.8% in March, the bureau said, compared with a eurozone average of 0.6%.

But it's Ireland and Spain that are battling to claim the unwanted prize of ropiest economy at the moment. The Irish Republic has unveiled its second budget in six months to deal with its rapidly contracting economy. The emergency budget includes a large rise in taxes and a cut in spending, to deal with Ireland's budget deficit. Finance Minister Brian Lenihan also said an independent agency would take over banks' bad assets to try and restore lending. His forecast for 2009 was also revised down sharply. He expects it to contract by 8% this year, down from 3% in 2008. Dublin is being forced to deal with a deepening recession while being forced to correct the worst deficit in Europe.

Meanwhile, The Bank of Spain has predicted that the country's rate of unemployment will reach 17.1% in 2009 and 19.4% in 2010. Spain currently has the highest unemployment rate in the European Union, with a rate of 15.5% in February, nearly double the EU average.

Back in the UK, the Bank of England has kept interest rates at their historical low of 0.5%. The news came as little surprise; the BoE having cut rates six times since October last year, when they stood at 5%.

The UK global goods deficit narrowed sharply and by more than expected to GBP7.3 billion in February, as exports to countries outside the European Union rose rapidly, the Office for National Statistics has said. Analysts had predicted a deficit of GBP7.6 billion. Exports to non-EU countries rose by 13% in the month, with economists pointing to a weaker pound as the reason for the increase in exports.

According to the Office for National Statistics, UK factory gate prices posted their weakest annual increase since 2007 in March following a record drop in petroleum product prices. Output producer prices increased 0.1% on the month and 2.0% on the year, the weakest rise in annual terms since July 2007. Economists were expecting output prices to increase 0.1% on the month and 2.1% on the year.

The pound has inched up against its major counterparts this week and is currently trading at an interbank rate of between 1.0906-1.1106 against the euro, 1.4641-1.4841 against the US dollar (a two-month high) and 146.84-146.86 against the Japanese yen.

The best news, however, comes from the Czech Republic, where the koruna has risen to a 2-week high against the US dollar after a report showed that the Czech trade surplus increased more than expected in February.

Whether it's a weekend of religious significance for you or just a chance to kick back for four days with a belly full of chocolate, have a great time!

Unsurprisingly, the G20 conference has dominated the news this week. While Barack Obama arrived at Downing Street as President for the first time, protestors attempted to tear down the infrastructure of some of London's largest banks. Nearly as destructive as the protestors were the leaders of France and Germany, who threatened to tear down any chance of agreement with some bullish brinkmanship.

While the headlines this week have been devoted to the anti-everything protesters, there has been some surprisingly positive housing news in the UK, with mortgage approvals for house purchases in Britain rising more than expected in February, according to official figures from the Bank of England. There were 38,000 approvals in the month, up from 32,000 in January - the highest number since May 2008.

Earlier today, a report from the Nationwide said that house prices rose in March for the first time since October 2007. The building society said that property prices increased by 0.9% compared with the February. That reduced the annual rate of house price falls from 17.6% in February to 15.7% in March, with the average UK home costing £150,946.

The Nationwide report, especially, ensured that the pound climbed to a multi-week high against the euro. The pound has also climbed to a 16-day high against the Swiss franc, an 8-day high versus the Japanese yen and a 1-week high against the US dollar. Interbank rates for the GBP-EUR pairing are currently around 1.095, with the GBP-USD pair trading around 1.455.

The European Central Bank has cut interest rates in the eurozone to a record low of 1.25% from 1.5%. While a drop had been anticipated, the cut was smaller than had been expected. ECB President Jean-Claude Trichet said the bank would consider making further cuts. However, Trichet stopped short of revealing whether the ECB would follow the central banks of England, Japan and the US in moving towards quantitative easing.

The euro jumped by the largest margin for nearly a fortnight against the US dollar following the announcement of the rate cut, soaring to nearly $1.35.

The majority of data from the eurozone, however, remains bleak. Unemployment across the eurozone rose to its highest level in almost three years in February. The jobless rate across the 16 nations that share the euro rose to 8.5%, or 13.47 million, up from 8.3% in January, official figures show. With unemployment at 15.5%, Spain has the highest level of unemployment in the eurozone.

While investors had flocked to the world's most liquid currency in the early part of the week, reaching 12-day highs against the pound, euro and Swiss franc, the US dollar has since slumped back against all of its major counterparts amid fresh concerns about struggling US carmakers General Motors and Chrysler. The fall followed comments from a rescue task force that said their plans for recovery are "not viable."

Asia continues to lose its previously sturdy image as a safe haven with business confidence among major manufacturers in Japan falling to a record low, according to a wide-ranging survey by the Japanese central bank. The quarterly Tankan survey of more than 10,000 companies is closely watched in Japan as a key indicator of the health of the country's economy. Results released by the Bank of Japan show that business confidence among major manufacturers tumbled dramatically, hitting the lowest level ever recorded.

There was better news regarding business confidence in Poland. With the industrial sector holding up better than expected in March, although it remains in sharply negative territory, as new orders remained near record lows while job shedding continued. A survey of 300 industrial companies prepared by Markit showed Polish manufacturing PMI rose to 42.2 in March, from 40.8 in February - its third straight monthly increase and considerably better than the 40.9 figure that had been forecast.

So, at last, there are signs that things may be turning around - at least in parts of the globe. Although even as things improve in the currency markets, one thing won't change: Formula One's bias towards Ferrari. We'd feel sorry for Lewis Hamilton if he wasn't so rich, young and handsome.

Enjoy your weekend!

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With England trouncing France in the rugby and Amir Khan out-boxing Marco Antonio Barrera, last weekend felt like a good time to be British.

Unfortunately, the positivity hasn't lasted. Formula 1 has changed its rules to all but ensure that Ferrari and not McClaren (and, of course, Lewis Hamilton) will win the drivers' championship next year and almost all of the data released from the UK has been dire.

There is now an average of 10 jobseekers for every vacancy advertised in the UK, with 60 people chasing each job in the south east. A report published by the Office for National Statistics on Wednesday showed UK unemployment at two million. Meanwhile, the British Chambers of Commerce has estimated that UK unemployment will reach 3.2 million - or just over 10% of the workforce - by the second half of next year.

Housing data is not much more positive. The fall in UK house prices gathered pace in January, according to the government's own house price index. Prices were 11.5% lower than in January 2008, an increase in the 10.2% annual fall seen in December. The price of the average UK property is now down to £195,724, a fall of £26,034 in the past year. Prices have been falling fastest in Northern Ireland, down 14.3%, and are still highest in London, where the average home costs £301,383.

Adding to these woes, the International Monetary Fund has predicted that the recession will last longer in the UK than in any of the world's other major economies. The IMF has warned that the UK will be the only member of the G7 group of leading industrial countries that will continue to see its economy shrink in 2010. The IMF said the UK economy will shrink 3.8% this year and 0.2% in 2010. By contrast, IMF predictions see the G7 nations' economies declining 3.2% on average in 2009, before growing 0.2% next year.

Confirmation that Barclays is in talks over the sale of its exchange-traded fund business iShares helped the pound make some gains. However, both the Euro and the US Dollar quickly clawed back their early losses and Sterling has now reached a six-week low against the Euro.

Across the Atlantic, Federal Reserve Chairman Ben Bernanke suggested in a televised interview on CBS' 60 Minutes programme that the US recession would "probably" end in 2009, but that his country had averted the risk of plunging into a depression. Bernanke's remarks came ahead of a two-day meeting by the Fed that was swiftly followed by the US Dollar sinking to new depths.

The Federal Reserve said that it will buy almost $1.2trn worth of debt and expand purchases of mortgage-related debt to help boost lending and promote economic recovery. The size of the move stunned investors, and caused the Dow Jones stock index to jump almost 200 points. It is hoped that the measures will boost mortgage lending and the struggling housing market by lowering interest rates on mortgages and other forms of consumer debt.

However, in the short term at least, the news has caused a mammoth drop for the US Dollar. The greenback experienced its third biggest one-day decline on Wednesday since daily pricing began back in 1970, bringing a swift end to the rally that had pushed the Dollar to the highest levels since 2006. The greenback ended Wednesday down against both the Euro and the Pound, and reached a three-week low against the Canadian Dollar.

The US Dollar was kept under pressure by the gloomy results from the Empire State manufacturing survey, which fell 4 points in March to -38.2, a new record low. Meanwhile, the housing market index from the National Association of Home Builders (ranked on a scale of 1-100) was unchanged at 9, from January's all-time low of 8.

There was, however, one piece of positive news from the US. Retail sales fell by just 0.1% compared with the same month last year, better than the 0.5% drop analysts were expecting. American consumers have become more cautious amid difficult economic conditions, cutting back on more expensive items such as new cars, but continuing to flock to supermarkets and discount stores in search of bargains.

Risk appetite has continued to dominate European markets, which have been posting increases of around and above 2% all week. Financial ministers from the G20 concluded their summit in London over the weekend, and vowed to do "whatever is necessary" to fix the global economy. This statement is likely to include measures to supervise freewheeling hedge funds and restore bank lending by dealing with the shaky securities burdening their finances. The announcements saw the EUR-GBP rate return to its highest level since late February, but the Euro also made notable gains against the Swiss Franc.

There was, however, some troubling data released in the Eurozone. The Centre for European Economic Research German economic sentiment survey fell to -90 from -86.2 in February. Meanwhile, economic sentiment is seen at -8, down from -5.8 in the prior month.

Meanwhile, a report from Spain's National Statistics Institute showed Spanish home sales fell 39% on the year in January, pointing to a deepening correction for Spain's once-flourishing home-building industry. Sales had fallen by 26% in December and 36% in November.

Hopefully next week's data releases will follow the example of the gorgeous springtime weather and brighten up. Until then, have a great weekend.

While the English may be champions on the football pitch, with Manchester United, Chelsea, Liverpool and Arsenal making it through to the quarter-finals of the Champions League, the edge in currency markets belongs firmly in the hands of the Euro. This week Sterling has lacked the legs to sustain even the most minor of rallies, in a diary packed with economic data and dominated by international risk trends.

The Pound has been driven ever-lower this week as a number of factors contribute to Sterling's economic woes. Severely weak industrial production and manufacturing figures were symptomatic of an economy in deep decline and trade balance figures reflected this, showing a deficit of -£7.7 billion in January. This week has also brought the start of the Bank of England's £75 billion quantitative easing programme which kicked off with a gilt auction and is designed to stimulate the UK economy over the next three months. Will it work? No-one knows but investors remain wary and this has kept Sterling trends neutral and dampened any real appetite for the Pound. Sterling has been confined to below 1.4 against the Dollar and is back down to single figures this morning against the Euro.

News from the US has dominated markets this week, herding investor dollars towards the safe havens as appetite for risk remains low. The big news has been that Citigroup and JP Morgan Chase, two of the remaining major Wall Street investment banks, have both announced they operated profitably in the first two months of 2009. Amongst stock markets the relief was palpable and this inspired a minor rally that briefly boosted the higher yielding currencies. However these have since been driven back to the lower end of ranges as markets nervously await the announcement of retail sales figures for the US in February. Consumer activity in the world's biggest economy is such a behemoth of an industry that it actually affects currency exchange rates throughout the world. Watch for volatility surrounding the announcement.

Ben Bernanke also gave a speech this week stating that US recovery could begin by the end of the year. Many economists are regarding this as optimistic to say the least, but this news also provided a short burst for equity markets and intermittently, currency exchange rates. On the other hand, Moody's has announced a list of 'bottom rung' US companies that it expects to go bankrupt including the big 3 auto manufacturers - GM, Ford and Chrysler and a number of media giants. Failure of major companies and an increasing unemployment rate are likely to exacerbate risk aversion in future.

The Euro remains an enigma. Despite evidence of marked economic deterioration, the Euro has been maintaining strength while risk aversion dominates and Sterling is under pressure from domestic data. ECB President Trichet this week gave a speech stating that ECB interest rates are unlikely to go beyond 1%. The fact that this policy remains at odds with central banks around the world is weighing on the Euro. Interestingly though, the ECB overnight deposit rates are at 0.5% - the same as the Bank of England base rate - and this essentially serves as a back door method of stimulating lending, providing a reply for some of Trichet's critics.

In Eastern Europe, Zloty has tumbled 26% against the Euro in the last 6 months. This makes Zloty the worst performer of the emerging currency market with the Hungarian Forint and Czech Koruna close behind. The Czech central bank has neglected to revise growth forecasts downward and is currently predicting a 0.9% economic expansion in 2009. Despite their significant downturn however, these larger Eastern European nations remain significantly better off than some of their regional counterparts, including Latvia and the Ukraine.

In the Asia-Pacific region this week, the Reserve Bank of New Zealand appeased markets by cutting the base rate to 3%, a reduction of 50 basis points which sent the Kiwi to two weeks highs against the US Dollar. The Australian unemployment rate has risen to the highest level in 4 years and Japan's economy is shrinking at the fastest pace on record since 1974. Unfortunately for Japanese exporters, this only served to strengthen the Yen further.

So much the same as last week, currency exchange rates continue to be driven by international appetite for risk. Throughout the world, the economic situation is grim and this is compounded by uncertainty over government responses and policy activity. Demand for currencies without the benefit of safe haven status is limited, as evident in Sterling - Euro exchange rates. Sterling weakness has become such an entrenched theme that the Pound has even been excluded from market rallies this week. Time to start controlling those controllable when it comes to foreign exchange!

A number of economists are predicting the Pound could be approaching a bottom against the Euro. However, quantitative easing remains a significant wildcard and the US situation is just too unstable to be making predictions without factoring in US activity and of course, appetite for risk. As always, information and timing are crucial. Be sure to get yourself registered so you have access to the best exchange rates as and when they happen.

Have a good weekend!

This week markets followed the now familiar theme of losses followed by rallies followed by more losses as market confidence suffered further hits in a climate driven by risk trends.

Friday last week brought the announcement that US GDP contracted at an annualized 6.2% in the fourth quarter of 2008. This was a much steeper decline than expected and was accompanied by a 4.3% drop in retail spending. With rumours abounding of a potential nationalisation at AIG, equity markets went into a tailspin, fuelling a rise in risk aversion around the world.

Needless to say markets opened on a distinctly negative note this week. This was exacerbated by the fact that AIG posted a whopping profit loss of $61 billion, the largest in corporate history or $28 million an hour, putting the meaning of 'loss' in an entirely different stratosphere. Following this announcement AIG received a further $30 billion in Federal funding taking taxpayer ownership to 77.9%. The Dow Jones and Standard and Poor's plummeted 4.2% and 4.7% respectively and market declines were felt around the world from Tokyo to London.

Wednesday saw a slight recovery in equities, followed by a rally in currency exchange rates although speculation over the pending ECB and Bank of England interest rate decisions capped the value of Sterling and the Euro when trading against the Dollar.

Thursday brought the interest rate decision which was in line with market predictions as the MPC and ECB both cut 0.5% from their base rates. This took interest rates to new record lows of 0.5% and 1.5% respectively. Having exhausted the interest rate option the UK is now looking towards quantitative easing to stimulate the UK economy. Rather than switch on the printing presses, quantitative easing allows the Bank funds to buy up bad debts and in theory, restore consumer and interbank lending to normal levels. The added uncertainty of how this will affect the UK economy is weighing on Sterling exchange rates.

The economic situation continues to deteriorate in the US with the private sector shedding 697,000 jobs in February. Timothy Geithner stated this week that the US slump is deepening with little hope of recovery in the near future. Government decisions in the US continue to wield a disproportionate amount of influence over the global economy as economic health in the US economy is crucial to global recovery. Within the US, the size and scope of AIG means the company itself is crucial to the health of the financial sector and in this sense, the entire global economy. Hence the government decision to broaden rescue efforts and provision of further aid this week.

The Euro remains under pressure as this situation continues to deteriorate in the Eurozone. Despite the 0.5% rate reduction, market perception is that the ECB is behind the curve when it comes to fiscal policy. Economic statistics in all the major economies continue to deteriorate and the situation in Eastern Europe is highly uncertain. Banking sectors in Eastern and Central Europe are to receive €24.5 billion from international organizations including the World Bank to help them weather the economic crisis. The ECB is currently considering a proposal to accept securities from Eastern European banks in local currencies and this could help the likes of Poland and Hungary who are currently suffering unfavourable exchange rates against the Euro.

Elsewhere the Australian Reserve Bank somewhat surprisingly opted to leave interest rates unchanged at 3.25% and GDP contracted -0.5% in the fourth quarter of 2008 taking annual growth to 0.3%. The Bank of Canada cut interest rates to 0.5% and this sent the CAD to touch on three month lows against the US. Chinese Premier Wen Jiabao announced a $585 billion economic stimulus package for China and this bolstered Asian equities with renewed enthusiasm.

For the moment risk trends remain the driving force in the international economy and currency exchange rates continue to shadow market trends. The cable rate seems to be treading a channel between 1.4 and 1.42 while the Pound remains in the vicinity of 1.11 against the Euro. Zloty is battling with a weak currency and a 34% drop in banking profits and Eastern Europe is being regarded with caution by investors and insures while instability is a feature of international markets.

An inspiring beginning to the week as Slumdog cleaned up at the Oscars and Gail Trimble took out the University Challenge opposition. Somewhat less inspiring for markets however as we have seen a number of new themes emerge.

Risk aversion is still top of the international agenda, albeit in a somewhat different way. The generally muted tone has settled back over equity markets following a mid-week rally triggered by comments from Ben Bernanke, Chairman of the Federal Reserve. The prospect of further nationalisation of major US banks has preoccupied markets and confidence remains the crucial force driving investor sentiment.

To quickly recap, the week began in a downbeat way after Christopher Dodd, Chairman of the Senate Banking Committee, announced that the government may increase its stake in Citigroup and Bank of America, taking the beleaguered banks a step closer to nationalisation.

This triggered a wave of risk aversion which sent Wall Street to multi-year lows and the Pound and Euro to the bottom of their ranges. As speculation of nationalisation grew, the Dow Jones fell to its lowest level in 12 years, Citigroup shed 20% of its share level while Bank of America lost 50%.

On Wednesday, Ben Bernanke made a speech noting that nationalisation was not imminent and that the government would be acting as supervisors rather than shareholders in the major banks. This led Wall Street to rise 3% and currencies rallied, boosted by the redistribution of funds as investors recovered some of their appetite for risk.

In the UK, the Pound's fortunes have been largely linked the rise and fall of investor confidence. Midweek the Pound rose to 1.46 versus the US Dollar, yet the release of GDP figures showing an unrevised -1.5% contraction in the fourth quarter of 2008 and a £24 billion write down from RBS sent Sterling back to 1.41 on the Dollar and 1.11 against the Euro.

The Euro continues to be plagued by macro-economic factors which are threatening the concept of a single currency. ECB President Trichet noted the difficulties facing the Euro and highlighted the diverse range of policy responses the global recession requires.

The EMU current account deficit is currently at €7.3 billion, reflecting declining import demand in the Eurozone.

Results of the German IFO survey showed business confidence plunged to a record low in February. As a survey of over 7,000 businesses in the Eurozone's largest economy, the IFO is seen as a crucial indicator of Eurozone economic sentiment and this too weighed on the Euro.

Elsewhere, mining giant Anglo American cut a further 9,000 jobs on top of the 10,000 cut last month. Reduced commodity demand is impacting on the activity and this is affecting the South African and Australian economies.

The Philadelphia Fed showed manufacturing levels have reached 19 year lows in the US and Canadian inflation fell 0.4% in January, the same as the previous month.

Within Eastern Europe, Poland is expected to be the tiger of the region, with growth of 1.3% predicted this year despite the recession. Contractions of up to -3.5% are expected in Hungary.

Financial analysts Nomura expect Zloty to continue to trade in the vicinity of 4.7-4.75 versus the Euro in the first and second quarters of 2009, before rebounding to the 4.55 level in the second half of the year.

A significant new theme has also emerged this week; Yen weakness. While traditionally regarded as a safe haven, rapid deterioration in the Japanese economy has rattled investor confidence in the currency. Japanese exports plunged 45.7% in January as a result of reduced demand from Japan's major trading partners.

Currently at their lowest level in 10 years, this decline was fuelled by a 53% drop in exports to the US, 47% to the Eurozone and similar steep declines to China and other Asian economies.

Worldwide, currency markets continue to shadow US equities, which remain the primary determinant of market sentiment.

President Obama addressed the nation this week, outlining an ambitious government plan which includes both stimulating and greening US industry, cutting taxes and halving the US budget deficit within the next five years.

Combined with Bernanke's comments this sent a wave of confidence to investors yet this confidence is countered by the fact that any upturn in UK or European growth is likely to lag behind the US by 1-2 quarters.

While economists initially predicted a 'V' shape recession, the decline may be longer than initially thought. More solid trends may be visible with the publication of first quarter statistics. So, although it feels like I have been saying the same thing for weeks now, the situation remains unchanged. Uncertainty abounds and while this is the case, information and keeping a line open to your dealer is your best bet.

Have a good weekend!

Sitting here amongst the London drizzle I cannot help but spare a thought for Allen Stanford the Texan tycoon who is probably hiding on a tropical island somewhere. Stanford, you may recall once put up $20 million for a Twenty20 cricket match and has recently been accused of an $8 billion fraud by the US Securities and Exchange Commission. Perhaps more criminal is the moustache he's sporting but that is by the by... if England had got as many runs on the Antiguan pitch as Stanford had on his Antiguan bank, English cricket would be much better for all involved.

This week the sense of global unease has continued. Equity markets are still the barometer for currency exchange rates and the prevailing economic sentiment has been negative. G7 leaders and the US Government have both failed to provide an immediate blueprint for recovery, despite passing multi-billion dollar rescue packages and risk aversion continues to dominate the headlines.

In the UK, minutes from the February MPC meeting revealed an 8-1 vote in favour of a 0.5% reduction in the base rate and a unanimous vote in favour of quantitative easing. This is where the Bank is set to buy gilts and securities in an attempt to increase the supply of money and alleviate toxic debt in the UK economy. Sterling fell to a two week low against the US Dollar following the news but has rallied against the Euro amid concerns over the economic situation in Eastern Europe.

News has been distinctly negative in the Eurozone this week as we learned that the export-led German economy shrunk by 2.1% in the final quarter of 2008. This was accompanied by over 1% contractions in France and Italy which dragged Eurozone GDP down by 1.5% in the first quarter of 2009. Combined with a 3.8% contraction in the US and a 3.3% contraction in Japan in the final quarter of 2008, this news led to downward pressure on the Euro and a loss of risk appetite throughout the week. Oil also declined to $41 a barrel on the back of this news.

However the major source of pressure for the Euro this week has been reports of economic deterioration in Eastern Europe. This sparked investor fears over the exposure of Western European banks to bad debts and has undermined Euro sentiment all week. Hungarian, Polish and Czech government debt has been downgraded by investors and Zloty fell to a five year low against the Euro.

In the US President Obama released details of a $275 billion housing package and signed off on the $787 billion Federal Reserve rescue package. Both deals are unprecedented in scope and scale yet have still failed to provide the confidence boost so desperately needed by markets. As a result Dollar strength has largely come via risk aversion this week which has kept the Pound low and Australasian currencies lower.

So at present, confidence and growth prospects are determining market sentiment which is determining currency exchange rates. The fact that no one knows how long this recession will last and what needs to be done to remedy it is keeping confidence low and pressuring currencies into 'consolidation channels' otherwise known as terrible exchange rates. Until we see an upturn in growth, or at least a less drastic downturn, investors will continue to favour short term positions, fuelling yet more currency volatility.

Australasian and Eastern European currencies remain particularly vulnerable as investors continue to dump riskier currencies at a time of unprecedented economic uncertainty. For governments, installing confidence and unlocking credit remain crucial to garnering positive economic sentiment and policy responses require international co-operation. For those with investments in the perceived 'riskier' regions, keeping a line open to your dealer is the best option so you will be informed of market movements as and when they happen. If recent volatility is anything to go by, this could make a significant difference to your bottom line.

My charity skydive is also drawing near so if you wish to donate that would be much appreciated!

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The US Dollar really needs no introductions. It is the international heavyweight among currencies, the world's foremost reserve and legal tender of the largest economy and military power on earth.

Commonly referred to as the greenback or buck, the Dollar is used by 10 countries and territories and is pegged by 22 countries throughout South America, the Caribbean and the Middle East.

Economics

The US Dollar has dominated global currency markets since the US first emerged as a superpower following WW2. With Britain and European nations heavily indebted and economically weak, the Bretton-Woods agreement set the scene for the Dollar to become the world's reserve currency.

Despite having surrendered some ground with the emergence of the Euro, the strength of the Dollar remains undisputed internationally and the Dollar serves as a magnet for investors across the globe. As the default currency for the purchase of oil and gold, the world's two most valuable commodities, the Dollar benefits from a safe haven status in addition to its value as a reserve. When risk aversion and economic uncertainty plague markets and investors flock to tangible assets the Dollar, along with the Yen and Swiss Franc, are the major beneficiaries. This allows the US government to run large budget and trade deficits whilst retaining its core strength and the Dollar to remain stable, even thrive, amidst financial turmoil.

Influences

In terms of influences on the Dollar, its central status in the global economy means it really is a law unto itself. Whilst affected by global events; commodity prices, OPEC decisions, equity markets and domestic conditions, often the ground the Dollar loses in confidence it will make up for in safe haven status. This ensures the currency is insulated against major declines in the global economy.

That said, the recent credit crisis has been the most major challenge to the health of the Dollar since the Great Depression and is worth a brief digression to illustrate the centrality of the US Dollar to the global economy.

Global Credit Crisis

The origins of the current financial crisis are widely attributed to the sub-prime mortgage market in the US. Since the collapse of this market, a series of shocks and aftershocks have been felt throughout the world and fundamentally altered the financial landscape.

Source: www.newsvote.bbc.co.uk

Following a decade of booming economic growth in the US, high market confidence, disposable income and easy credit created a burgeoning sub-prime mortgage market in which risky debts were offered to people with poor credit histories on a huge scale. However, during the 2 years between 2004 and 2006 interest rates rose rapidly, from 1% to 5.35%, forcing many of these sub-prime lenders to default on repayments. Although by that stage, the complex nature of debt re-packaging and fluidity of international credit markets meant that the 'toxic' debts had spread throughout the financial system.

In April 2007 New Century Financial, a company which specialises in sub-prime mortgages, filed for bankruptcy. Having on-sold debts to banks and other financial institutions, the collapse in the sub-prime market begins to take effect for US banks. By July, Bear Stearns had to warn customers the money they invested may not be safe.

Under normal conditions banks survive by lending heavily to one another. The Bear Stearns scenario essentially froze interbank lending as banks refused to lend in favour of shoring up liquidity for themselves. Central Banks including the Federal Reserve, ECB, Bank of Canada and Bank of Japan lent large amounts to banks in an attempt to improve market liquidity.

By September 2007, the crisis had spread around the world and Northern Rock in the UK experienced its biggest 'run on the bank' in more than a century. By the end of 2007, the world's strongest economies faced a major downturn as the lack of available credit brought with it economic uncertainty, low market confidence, unemployment and repossessions.

Panic Mode

Throughout 2008, as a consequence of the bad debts in the sub-prime market, major banks were forced into billion dollar write downs. International governments persisted with billion dollar bail outs of lending giants such as Northern Rock in the UK and the Federal mortgage guarantors Freddie Mac and Fannie Mae in the US but in the absence of interbank lending to provide much needed liquidity, there was nowhere for banks to go but down.

On the 15 September 2008, CEO Richard Fuld declared Lehman Brothers, the fourth largest securities firm in the US bankrupt, triggering a wave of panic selling which wiped billions from equity markets internationally. Interbank lending froze once again and central banks made billions available in overnight loans to prevent full scale collapse of credit markets. Even the practice of short-selling, usually a legitimate market activity, was banned as markets were deemed so volatile the effects could be potentially devastating. Panic and fear characterised markets as nervous investors speculated on who would be the next to fall. Risk aversion and investor flight to tangible assets such as oil and gold buffered the US Dollar against the worst of the crisis, but shares in Wall Street were hit heavily.

Source: www.newsvote.bbc.co.uk

In the aftermath of Lehman's Central Banks, led by the Federal Reserve, announced unprecedented handouts to underwrite interbank lending and buy preferential shares while flooding markets with capital to improve wafer thin liquidity. A series of partial nationalisations of major banks occurred throughout the US, UK and Europe, with the irony of the failed free-market ideology escaping no one. The US government made $700 billion available in the rescue package, with £250 billion pounds in the UK.

Source: www.newsvote.bbc.co.uk

Just days after the rescue packages were announced, 6 central banks announced a co-ordinated interest rate cut of 50 basis points in an attempt to breathe life into the ailing global economy. Markets responded well, posting enormous rallies, yet have persisted with bearish trends as the data in recent weeks indicates recession is likely to persist into the second quarter of 2009. The MSCI World Index of global equities has declined 41% thus far in 2008.

Future

Despite being at the epicentre of the downturn, the US Dollar has emerged relatively unscathed from the crisis due to its unique and inherent strength as the world's reserve and a safe haven currency.

As risk aversion favours tangible assets and strong stable currencies, the Dollar has also benefited from its status as the default tender for the purchase of oil and gold, commodities that are unlikely to fall out of favour anytime soon. In addition, the repatriation of foreign investment is further supporting the Dollar, at the expense of countries on the periphery of the global economy. This week, Hungary has secured a $21 billion loan for IMF assistance and the Federal Reserve has pledged $120 billion dollars to South Korea, Mexico, Brazil and Singapore.

Quarter 3 GDP is released for US this week and is likely to show the country in recession as a result of the sub-prime crisis. Yet while the Dollar was quick to fall in the early stages of the credit crunch, the very structure of the international system is designed to ensure the place of the Dollar as a superpower.

The Euro is the official currency of the European Union. As the single currency for over 15 member nations, known collectively as the Eurozone (Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, Spain), it directly affects over 320 million people.

The Euro is also used in a further 11 countries, while others have currencies 'pegged' to the Euro.

Consequently, the Euro affects over 500 million people and has the largest cash circulation in the world. At present, the UK and Denmark have each negotiated with the EU to retain their own currencies, while Sweden declined to adopt the Euro in a referendum in 2003.

The Euro is managed and administered by the European Central Bank (ECB), based in Frankfurt, and the Eurosystem, a collective of Central Banks from Eurozone member nations. Although a common market place has been the objective of EU members since 1957, this goal came to fruition with the 1992 Maastricht Treaty which provided the legal framework for the single EU currency and the founding of the ECB.

The Euro was introduced in 1999, initially as an accounting currency, with physical notes and coins coming in to circulation on the 1st of January 2002. The symbol for the new currency was designed by Belgian Alain Billiet, and according to the European Commission:

Inspiration for the € symbol itself came from the Greek epsilon (Є) - a reference to the cradle of European civilisation - and the first letter of the word Europe, crossed by two parallel lines to 'certify' the stability of the euro.

Since its inception the Euro has rapidly established itself as a heavyweight in the global foreign exchange market. At present it is second only to the US Dollar in terms of international strength and stability.

Economics

The benefits of a common marketplace have long been exalted by economists. By negating fluctuations in exchange rates between neighboring countries, the adoption of a single currency allows greater and more profitable, trading among neighbors. Within the Eurozone, international payments are considered domestic. Greater price parity has also been achieved among nations, and macro-economic stability has occurred as the Euro has delivered improved liquidity, flexibility and stability for both national economies and the region as a whole.

Because low inflation is a hallmark of economic stability, this has become the central concern of the ECB. The ECB operates independently of its member nations and unlike its US counterpart, the Federal Reserve, does not have the secondary concerns of sustained growth and employment within its mandate.

Its unique status as a common currency means the Euro is only as strong as its member states. Consequently, membership of the Eurozone brings with it strict criteria regarding economic stability and budget deficits, as outlined in the Maastricht Treaty.

Since 1999, low inflation and stability have made the Euro attractive to investors and it is now the world's second largest reserve currency after the US Dollar. By the end of 2006, more than one quarter of foreign exchange holdings were in Euros, up from 18% in 1999. At present, the Euro is the second most active currency in terms of foreign exchange, accounting for around 40% of global daily transactions.

Influences

The Euro is a floating currency and as such, is characterised by fluctuations in its foreign exchange rate.

After its introduction in 1999, the Euro was heavily devalued on foreign exchange markets, particularly in relation to the US Dollar. Making an initial appearance at US$1.18/€, the Euro dropped to $0.8228/€ by 26 October 2000. However with the implementation of the physical currency in 2002, the Euro began to appreciate and has since retained its international value.

The strength and size of its member nations, the status of the Euro as a reserve currency and its prominence in international political organizations, ensure the Euro will retain its international strength.

Future

Widespread volatility is likely to characterise markets for some time as nervous investors, low market confidence and reactive markets make forecasting foolish at present. Throughout the credit crunch, the Euro has fluctuated widely and change will be the only constant in the short-term as financial news emanating from the US will continue to shape global markets.
However, the Euro is likely to retain its international value, and has even fared well despite the credit crunch, as its strength and stability have been sought as a safe haven for risk adverse investors. The diversity of the Euro's constituent nations will also help the currency to weather the international storm.

Euro - United States Dollar - last 12 months

Source: http://newsvote.bbc.co.uk

Throughout the recent crisis, the ECB has worked in conjunction with the Federal Reserve and Bank of England to ensure international liquidity in the financial sector. Barclays' analysts argue weakness in the Eurozone has been exaggerated, with some appreciation expected once oil prices have stabilised and a picture of growth prospects becomes clear.

Economic slowdown in the Eurozone is apparent, and Ireland has recently tipped into recession while Spain and Germany seem to be teetering on the brink. As global demand is reduced, particularly from the US and the UK, European products may struggle to find markets, but conversely, a lower value currency will increase their export competitiveness. Declining oil prices have also helped to relieve inflationary pressures.

It will be interesting how the euro handles the global financial pressures over the coming months. However as is always the case with markets, volatility and fluctuations always provide favourable conditions for someone, somewhere. Information and expert advice on when to trade is key.

This blog was provided courtesy of Currency Solutions.

Currency Solutions are experts in the currency markets and will help you achieve an exchange rate at the most opportune time thus ensuring you will receive more for your money.

Contact Currency Solutions for all your currency exchange needs »

Are Berbatov and Robinho the only ones with money in the bank this week?

Darling doesn't seem to have any, I certainly never have any - maybe magic boots are the only way to insulate yourself against financial oblivion? After signing with Manchester United for a whopping £30.5m this week, perhaps Berbatov could teach Darling a thing or two about economics, or at least about asset valuation!

Darling's comments in the Guardian last weekend, yes the "60 years" ones, can be regarded as the political equivalent of turning your pockets out to reveal lint and a few pence rattling around in there.

Image is everything in politics and the negative press following this interview has depressed the pound even further this week as confidence sinks to an all time low.

While famed for his pragmatism and ability to get the job done, Darling's searing honesty was interpreted as a virtual 'abandon ship' by currency traders as they dumped the Pound in favour of offshore currencies, sending Sterling into a freefall.

Exploring new lows virtually every day this week, the pound dropped £0.8144 against the euro and $1.770 against the dollar on Wednesday, rounding off a decline of 10% in just one month.

Conspiring to keep the pound weak has been the raft of negative data released.

OECD forecasts singled out the UK as only economy from the G7 group to face recession. Sterling faced a 12 year low in a trade weighted index for the 10th consecutive month and PMI data showed contraction construction, service and manufacturing sectors across the board.

The housing market struck a similarly bleak tone, with new home loans for July the lowest in 9 years and house prices declining 10% since the beginning of 2008.

In response to the domestic situation the MPC decided to keep interest rates on hold at present, maintaining the base lending rate of 5%. The pound trimmed its losses slightly on Thursday following this decision, recovering against the Euro and the US Dollar but remains on the edge of uncharted territory.

But as there are always winners and losers in the currency game, the depreciated pound has created a veritable bonanza for buyers of the currency.

If you are looking to change your Euros back to Sterling, now is a great time to act!

In the Eurozone this week, news has been similarly grim.

On Thursday the ECB also opted to keep interest rates unchanged at 4.25% and ECB president Jean-Claude Trichet, having obviously learned nothing from the Darling incident, commented that the Eurozone is experiencing an "episode of weak activity".

In addition, Luxembourg Finance Minister Jean-Claude Juncker's claims the Euro is "effectively overvalued" at present led the Euro to fall for the first time in 8 days against the Pound as well as against the US Dollar and the Yen.

With the ECB revising growth predictions for 2008 and 2009, proceed with caution seems to be the message with the euro at the moment. Your dealer can keep you updated on the situation as and when it changes.

It has been a relatively quiet week for US markets. The Indian summer for the Dollar continues, coinciding with contraction in European and Asian economies as they follow in the wake of the US credit crunch. Hurricane Gustav in the Gulf of Mexico has been tempering the price of oil which is further supporting the dollar.

In other markets, the Reserve Bank of Australia's decision to lower interest rates has deflated the Aussie dollar this week, taking the Kiwi down with it. The Slovak Koruna has recovered from its 5 month low against the US Dollar and the pick of foreign currencies remains the Yen as it continues to benefit from credit nervousness and risk aversion internationally.

Have a good weekend!

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