by Ian Cragg

The US dollar has seen various changes of fortune over the last month. Fresh worries in the Eurozone have caused the Dollar to become a safe haven for worried investors, whereas across the English Channel the pound has strengthened. Around the world financial worries have affected global exchange rates and with China recently revealing that its growth has slowed people are beginning to wonder whether sustained growth anywhere is possible.

Dollar vs British Pound (USD v GBP)

At the beginning of March the pound was trading at 1.596. As the month progressed, more and more optimistic opinions of the British economy began to emerge. A combination of good PMI figures suggest that the UK is set to grow better than expected thanks to the fastest growth for manufacturing in 10months.

Later in the month a confirmation by the Bank of England that it would not contribute anymore Quantitative easing allowed the pound to breach the psychological barrier of the 1.6000 level for the first time in six months. The pound reached its highest peak of 1.613 on the 23rd of April suggesting that the upward trend is not about to slow just yet. If the Bank of England continues its policies of keeping inflation levels down and maintains that it will issue no further quantitative easing then the pound may remain favourable over the dollar.

The key things to keep an eye out for over the next month are:

• 25th April- The latest GBP Gross domestic product figures are released.
• May 2nd- The latest GBP purchasing manager index Construction (PMI) figures are released.

Next month the pound is expected to trade at 1.571.

Dollar vs Canadian dollar (USD v CAD)

At the beginning of March the US dollar was trading at 0.9887. A number of important reports were released by the Canadians including unemployment rates and consumer price index reports. On the 9th of April the Canadian government released its Business outlook and future sales report.

The strong results caused the US Dollar to rise to a four month high level of 1.0053. On the 17th of April the bank of Canada released a statement that it was planning on raising interest rates. The statement took markets by surprise and immediately sent the CAD higher — it closed up 0.96 of a cent at 100.99 cents US. Later this month the Canadians will be releasing a number of important reports that will no doubt affect the exchange rate.

The key things to keep an eye out for next month are:

• 30th April- CAD GDP report
• May 4th- CAD Ivey purchasing managers index

Dollar vs Australian Dollar (USD v AUD)

At the beginning of March the Australian Dollar was trading at 1.0789. The main event to affect the Aussie dollar was the release of the strong manufacturing data from the United States. The Royal bank of Australia was expected to keep the cash rate at 4.25 per cent which they maintained. Earlier in the month the pair had been relatively steady but once the RBA comments filtered through, the price action quickly headed south as traders began pricing in the odds of a rate cut next month.

The release of some better than expected employment figures caused the Aussie to rise slightly to 1.045. Its current rate is 1.028.

The key things to keep an eye out for next month are:

• 1st May- The bank of Australia revises its rate decision
• May 4th –The Australian bank issues a statement of its monetary policy.

Dollar vs Euro (USD v EUR)

At the beginning of March the Euro was trading at 1.333. In mid March greater confidence in the US labour market combined with tensions easing in the financial market allowed for a better outlook for the US economy. Further Quantitative Easing measures were not mentioned and this boosted the US Dollar as inflationary concerns were put on hold. The Euro then dropped to a rate of 1.300.

Throughout March and most of April the Euro was going up and down against the dollar like a yoyo. A series of concerns caused by the continuing euro crisis led to the Euro’s drop however the Euro found a degree of support in the region of 1.31 against the Dollar and strengthened during the Spanish bond auction on the 19th of April, amid a sense of optimism that investor demand would increase. As a result the Dollar is expected to fall to 1.290 against the Euro.

The key things to keep an eye out for next month are:

• 26th April – A number of important Eurozone data reports
• 2nd May – Release of German employment figures.

Dollar vs Hong Kong Dollar (HKD)

At the beginning of March the HKD was trading at 7.756. Because of the influence of the Yuan the HKD is tied to the data released by China. In mid March the HKD stood at 7.769 however, later in March China released information that it had experienced a slowdown of growth which had an impact on the HKD causing it to drop to a level of 7.756. The Euro crisis has also impacted on the HKD. The HKD is expected to remain steady at 7.761.

Dollar vs United Arab Emirates Dirham (AED)

Currently the UAE is trading in the region of 3.67400.The Dirham remains directly pegged to the US Dollar, so any relative strength, or weakness, in the USD is directly mirrored in Dirham movements.

Dollar vs Singapore Dollar (SGD)

At the beginning of March the SGD was trading at 1.249. Singapore’s inflation accelerated more than economists estimated in March, justifying the central bank’s decision to tighten monetary policy in April. The Singapore dollar is Asia’s best performer this year as investors believe the island will curb prices and tolerate a stronger currency.

The coming month will be fairly turbulent and unpredictable due to the impacts of the continuing Eurozone crisis. Elections in France and other EU nations are sure to cause unease on the markets worldwide despite an overall level of optimism that the worlds markets are improving.

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