Currency market updates - from Foreign Currency Direct (www.currencies.co.uk)

31st August 2007

Aidan Kilvington

 

Mixed Sterling Future

Yesterday we saw Sterling make small gains against both the US Dollar and the Euro as data showed that UK mortgage approvals were at an above-forecast 115,000 in July. June data was also upwardly revised to 115,000.

“It gave a bit of a lift to the pound. It says that there is still strength in the consumer sector and it is UK yield-positive” Said Naeem Wahid, currency strategist at HBOS Treasury Services.

What this may mean for currency purchasers is that even though the UK interest rates have increased 5 times over the last 12 months, this shows that it hasn’t reduced the number of people applying for mortgages. This may lead to further speculation of another interest rate hike down the line.

In stark contrast to this, Nationwide reported that there are “Clearer signs” that the housing market overall is slowing down.

Reports showed that in August the average UK house price rose 0.6% only just over the market expectation of a 0.5% gain.

However against the annual report, house price inflation fell from 9.9% to 9.6% in July, the slowest annual rate since March.

The average house price in the UK is now at £183,898

Responding to the recent global stock market turmoil Nationwide said that UK house prices “are unlikely to be significantly hit” in the short term but cautioned that the “dependence of the UK economy on financial services poses a longer term risk” if the turbulence becomes a lasting problem.

The Nationwide added that they expected house price growth for 2007 as a whole to slow down to between 5%-8% it believes that the 3 main reasons for this are – weaker affordability as prices grow much faster than earnings, the knock on effect of higher interest rates and inflation and the expectation of lower prices.

As you can see, there are conflicting reports being issued all the time, some providing a more positive outlook than others. Neither of these reports is conclusive as to what is going to happen with Sterling over the coming months and into next year.

If the global stock market problems persist, on top of the housing market slowing it may be that the current buying rates of exchange won’t be available for long.

We can fix exchange rates for anywhere up to 2 years in the future on most major currencies, eliminating the risk on the open market – which currently appears to be fairly high. All that is required is a deposit for the contract and you can secure your rates removing the necessity to try and keep up with everything that is going on and what it means for you.

 

US Economy Woes Continue

Yesterday the issues surrounding the “Credit Crunch” continued to hurt the US economy and the uncertainty about where the FED’s next announcement will go meant that investors are still jittery according to analysts.

This was after hopes of a US rate cut had been lifted by comments by FED boss Ben Bernanke who had said that he was “prepared to act as needed” to make sure that the ongoing problems didn’t adversely affect the economy.

Almost adding insult to injury a report into the unemployment levels in the US showed the number of people without a job was increasing.

“The jobless claims increasing … is not a sign of economic strength” said Charles Campbell of Miller Tabak in New York.

“Given the other issues in the financial area, you need to have the consumer in the game and in order to do that they must have jobs in order to spend”

What this means for you the currency purchaser is that US Dollar rates are still at near 26-year highs and with an uncertain future ahead it may be worth taking advantage of them before they disappear. Contact your account manager who will discuss all the options available to you.

Traffic No More?

If you, like so many others are fed up with the daily commute no doubt involving in some cases hours of sitting still in your car then an American based company may have the answer.

The first “Flying Saucer” or M 200G to its creators is what Dr Paul Moller (Moller International) foresees as the answer to modern day traffic congestion.

In essence it is a car that is capable of vertical take off and landing and hovers 10ft above the ground (any more and a pilots license would be required)

“Look at the sky above us – how many aircraft do you see? It’s a great space that is not being utilised. That is what we plan to use. Cars are finished as a means of getting around. It’s only a matter of time”.

It’s powered by 8 engines, which can run on petrol, diesel or even ethanol.

Expected to cost around $90,000 and with the US Dollar rates currently so favourable, why not ditch the normal commute, contact your account manager at FCD to find out how cheap your very own “Flying Saucer” can be.