Daily Foreign Currency Exchange News: 4th October, 2010

Some dealers in the  Foreign Exchange community believe that the dollar is likely to remain weak against the Japanese yen, in the long term. This is mostly based on the likelyhood that the Fed will bring in more quantitative easing, rather than the Bank of Japan.

If this happens, the US Dollar will also remain universally weak

Euro: The euro seems likely to consolidate against the pound, having made vast gains last week. As I write, the GBP/EUR is 1.1477, markedly lower than a week ago. How long can the euro sustain this position? If you have euros to change, it could be the time to talk to your foreign exchange dealer.

The euro has risen to its highest position against the dollar since March 17th. This is less about the euro strength, and more about the dollar.

Pound: The pound has generally gained against a weaker dollar, but has lost modestly against the euro. There are still concerns that the UK could bring in quantitative easing once more. The Chancellor will have his say on general policies today. If he can demonstrate prudence, we may see a small gain for the pound against the euro.

US Dollar: Weak all round. Heavy losses against the Japanese yen. There’s a great deal of concern that the Fed will bring back quantitative easing. It’s like the Dollar has a disease… Curable, but it’s going to be a bit uncomfortable. 

Japanese Yen: The Yen has gained. Like the euro, it has taken advantage of the weak USD.

Australian Dollar: The Aussie dollar has strengthened slightly as traders in Asia await Tuesday’s central bank meeting, when the Reserve Bank of Australia is expected to bring on fiscal constraint. If this happens, it will be the first time they have done it since May.

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