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The currency market can drastically affect your international property purchase and any international payments, selecting the right time to make transfers and payments requires a dedicated eye, therefore our partners constantly analyse the currency market and provide comment below.

For an Update on the global currency market please see the daily market brief below, or, for further information on the currency(ies) that will affect you, please click on the required currency for comments updated weekly.

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Market Rates:

	USD ($)	EUR (€)	GBP (£)	JPY (¥)	CAD ($)	AUD ($)	CHF (SFr.)	RUB (R)
US Dollar: 1 USD =	1.0000	0.6819	0.5384	109.9800	1.0651	1.1562	1.0993	24.5528
EU Euro: 1 EUR =	1.4661	1.0000	0.7895	161.2700	1.5614	1.6947	1.6118	35.9950
British Pound: 1 GBP =	1.8570	1.2663	1.0000	204.2900	1.9777	2.1473	2.0413	45.5919
Japanese Yen: 1 JPY =	0.0091	0.0062	0.0049	1.0000	0.0097	0.0105	0.0100	0.2232
Canadian Dollar: 1 CAD =	0.9387	0.6401	0.5053	103.2385	1.0000	1.0855	1.0321	23.0521
Australian Dollar: 1 AUD =	0.8644	0.5896	0.4654	95.0730	0.9207	1.0000	0.9500	21.2157
Swiss Franc: 1 CHF =	0.9093	0.6202	0.4897	100.0091	0.9685	1.0520	1.0000	22.3349
Russian Ruble: 1 RUB =	0.0407	0.0278	0.0219	4.4775	0.0434	0.0471	0.0448	1.0000

Daily brief

Mixed reaction to UK bank rescue package
- Initial Sterling rally loses momentum
- Expect much nit-picking today

Good morning. Three things were apparent from Tuesday's currency price action: the high-yielding commodity currencies are deeply unpopular with investors; the Yen is in demand for its safety features; among the Pound, the US Dollar and the Euro there is no clear favourite (or whatever the opposite of favourite is).

Sterling started the day badly, heading lower on a broad front as investors extrapolated the "stealth" US easing and the Reserve Bank of Australia's decisive interest rate cut into a coordinated global easing of monetary policy that would impact badly on the Pound. Perversely, Sterling began to recover shortly after some awful figures for UK manufacturing and industrial production. Nor was Sterling/Euro fazed by a jump in German factory orders, perhaps because investors saw the 7.6 per cent year-on-year decline as the more relevant indicator. It was the US Dollar's turn to feel the heat when Federal Reserve Chairman Ben Bernanke referred in a speech to downside economic risks and an easing of inflationary pressures. He said "...the Federal Reserve will need to consider whether the current stance of policy remains appropriate." With a similar tone to be found in the minutes of September's FOMC meeting his audience was left to conclude that a US rate cut could well be on the cards at the end of the month.

With another day of mayhem in equity markets it was inevitable that wholesale dumping of risk would mean an exodus from the Australian and New Zealand Dollars and a flight to the safety of the Japanese Yen. The Swiss Franc was a very minor beneficiary of that mood but the Franc is seen more as an adjunct to the Euro than a safe haven.

The big news this morning is of course the British government's plan to support UK banks by injecting fresh capital in the form of preference shares. The market's initial reaction was positive for the Pound, not because investors believe £50 billion is enough to set things right in a jiffy but because there is relief that Downing Street has moved on from indecision to action. Within half an hour however, as details of the plan emerged, the Pound was giving back some of its gains.

With (as yet unproven) rescue measures in place in the States and Britain the spotlight may now fall on Brussels; does the EU have any plan to address the Euro zone's problems other than to hold meeting on the subject? Investors know the answer is probably No but that won't stop them asking.

Data relating to Euroland second quarter GDP, UK shop prices, German industrial production, Canadian housing starts and US pending home sales will all be released today and nobody will care. Attention will concentrate on second-guessing the success or failure of Britain's bank capitalisation program and, of course, on the global risk/safety balance.

Specific Currency Commentaries

Please select the currency to view a weekly brief update:-

Euro - EUR

Buoyant Dollar sinks Euro
- Dismal economic data everywhere
- Could there be a UK rate cut this week?

After dipping below €1.25 on Monday the Pound set off higher, jumping nearly two cents the following day. It quickly gave back most of the gain but by Friday it climbed as far as €1.2850. This morning in the Far East it touched €1.2950 and it was close to that level when London opened; three cents higher on the week.

It was another week of financial panic as the US Treasury Secretary tried to steer his Troubled Asset Rescue Program (TARP) through congress. When the House of Representatives voted the bill down on Monday it sparked a world-wide flight to safety that gave equity markets their worst nightmare. The resulting chaos was enough to persuade all but the most vehemently-opposed congressmen to support the bill when it was offered to them again on Friday.

None of the UK economic data was particularly helpful but no UK banks had to be rescued or nationalised so the Pound was able to avoid the spotlight. Consumer confidence picked up by 4 points to a still miserable -32. Economic growth in the second quarter was confirmed to be zero. Nationwide saw house prices down by an eighth on the year. The Bank of England predicted an accelerating number of bankruptcies among small and medium enterprises. Purchasing Managers' Indices for the manufacturing, construction and services sector fell further below the demarcation line at 50 that divides expansion from contraction.

PMIs in the Euro zone were also lower, albeit only by the merest fraction in the case of the services sector. Consumer confidence remained low at -19 and unemployment ticked up to 7.5 per cent. Retail sales fell by 1.8 per cent for a second month.

The main even for the Euro was supposed to be European Central Bank President Jean-Claude Trichet's press conference after Thursday's Council meeting. Whilst M Trichet said the decision to keep the Euro's official interest rate at 4.25 per cent was unanimous, he also conceded that the two options on the table had been whether to do that or to cut it. The market inferred that Euro interest rates would be coming down either next month or in December.

The merging threat of lower Euro yields was exacerbated by the emergence of more bank funding problems in continental Europe. Fortis, Dexia and Hypo Real Estate bank all needed some form of government support during the week. Ireland and Greece were so concerned about the possibility of bank failures that they unilaterally offered blanket guarantees for depositors. At a weekend summit meeting German Chancellor Angela Merkel complained that the Irish and Greek measures were tilting the playing field unfairly. The very next day she did exactly the same thing for the selfsame reasons.

The Pound had a good week on the back of potentially lower Euro interest rates and the worsening financial climate in Euroland. It's real test will come on Thursday with the Monetary Policy Committee's interest rate decision. Upward pressure on inflation has all but evaporated and an interest rate cut this week is a real possibility. Given the disconnect between the Bank of England's official rate and the actual cost of borrowing in the wholesale market, some analysts believe there would be no point in lowering rates by the usual quarter percentage point. They argue that only a cut of 50 basis points - or even more - would have any effect on the real cost of money or on public psychology. Would such a move hurt the Pound? In normal times yes, but in the current circumstances it could be seen as a decisive and progressive step for the economy, in which case it would be positive for Sterling.

But there are too many imponderables out there to allow any hard and fast prediction of where Sterling/Euro will be next week. Buyers of the Euro still have little alternative but to hedge their risk by buying half the currency they will need.

AED UAE Dirham

US rescue program buoys Dirham
- Dismal economic data everywhere
- Could there be a UK rate cut this week?

GCC central bankers have agreed a plan that would bring currency union to the Arabian Gulf in 2010. The next meeting to advance the project takes place in Muscat in November. Many observers doubt that there is enough time to turn the plan into reality within the next 15 months but, officially, the timetable stands.

Until then the UAE Dirham will do exactly what it has been doing for more than 20 years: sticking rigidly to the Dollar at a rate of Dh 3.6725 to US$1. The movement of Sterling/Dollar defines precisely what happens to Sterling/Dirham.

The Pound looked heavy when it opened at Dh 6.65 last week and it never got beyond Dh 6.68. It bounced from Dh 6.45 on Thursday and had pulled back ten fils by the end of Friday but it was back down at the lows when London opened this morning.

Sterling spend most of the week in the back seat as the US Dollar pushed ahead. None of the UK economic data was particularly helpful but no UK banks had to be rescued or nationalised so the Pound was able to avoid the spotlight. Consumer confidence picked up by 4 points to a still miserable -32. Economic growth in the second quarter was confirmed to be zero. Nationwide saw house prices down by an eighth on the year. The Bank of England predicted an accelerating number of bankruptcies among small and medium enterprises. Purchasing Managers' Indices for the manufacturing, construction and services sector fell further below the demarcation line at 50 that divides expansion from contraction.

The US Dollar's week was similarly punctuated by unimpressive data. Metropolitan house prices fell by more than 16 per cent in the year to July. PMIs were lower on the month. Factory orders were down by 4 per cent. Friday's employment report showed a fall of 159,000 in Non-farm payrolls. The only ray of hope came from the Conference Board's index of consumer confidence. It went up by more than a point to 59.8, delivering its third monthly improvement on the trot.

The Dollar's main prop last week was the TARP. Even when it was voted down on Monday investors felt sure there would a successful re-launch. The plan has its faults, not least the idea that the first step to spending $700 billion should be to blow a further $100 billion on tax breaks. But the United States now has its Plan and it is seen as helpful to the Dollar.

That Sterling lost a net six cents over the week is more a comment on the Dollar's surge of popularity than on any fresh aversion to the Pound, which added three cents against the Euro and held steady against the Swiss Franc over the same seven days. Its real test will come on Thursday with the Monetary Policy Committee's interest rate decision. Upward pressure on inflation has all but evaporated and an interest rate cut this week is a real possibility. Given the disconnect between the Bank of England's official rate and the actual cost of borrowing in the wholesale market, some analysts believe there would be no point in lowering rates by the usual quarter percentage point. They argue that only a cut of 50 basis points - or even more - would have any effect on the real cost of money or on public psychology. Would such a move hurt the Pound? In normal times yes, but in the current circumstances it could be seen as a decisive and progressive step for the economy, in which case it would be positive for Sterling.

But there are too many imponderables out there to allow any hard and fast prediction of where Sterling/Dollar or Sterling/Dirham will be next week. Buyers of the Dirham still have little alternative but to hedge their risk by buying half the currency they will need.

AUD Australian Dollar

Rate cuts likely this week
- Dismal economic data everywhere
- Will the RBA and BoE both go 50bp?

Starting from $2.21 the Pound set off upwards on Monday and by the end of the week was up to $2.29. It jumped higher over the weekend and by the time London opened this morning it was up to $2.35.

The Australian numbers were rather better, on average. Retail sales went up in August, as did private credit. The balance of trade improved from a deficit to a respectable surplus; the biggest for more than a decade. The only sour note came from dwelling approvals, which were fewer than expected in August. Approvals numbers varied across the country with NSW down 8 per cent on the month and Queensland up by 6 per cent.

The coming week brings interest rate decisions both from the Reserve Bank of Australia and the Bank of England. The RBA will slice half a percentage point from its official rate and the Bank of England will cut by 25 or 50 basis points. Economists and interest rate futures prices are more confident about the Canberra decision than that from London. The feeling is that official interest rates bear so little relationship the wholesale markets that the central banks might as well make as big a noise as possible in the hope of having some impact on the rates charged to end users.

In the current circumstances it is feasible that relatively savage cuts could even have a positive effect on the currencies. After all, with nobody lending anything to anybody at any price a quarter percentage point here or there ought not to matter very much. What counts is whose economy turns the corner first. Australia's problem, in the face of a global recession, is convincing investors that a commodity currency, with dwindling numbers of customers for its raw materials, can do other than slip lower. The Pound's challenge is to avoid losing any more banks to nationalisation.

There are too many imponderables out there to allow any hard and fast prediction of where Sterling/Aussie will be next week. Buyers of the Australian Dollar still have little alternative but to hedge their risk by buying half the currency they will need.

CAD Canadian Dollar

Washington hogs the headlines
- Dismal economic data everywhere
- UK rate cut this week?

Sterling looked in poor shape as it fell through $1.89 last Monday but it bounced straight back from $1.8650, spiking to $1.91 on Tuesday. Wednesday's relapse was followed by Thursday's rally and the Pound plodded higher until the end of the week. When London opened this morning it was trading at $1.9150.

Canadian data were thin on the ground but it did not make much difference to investors, who were preoccupied by events elsewhere. The industrial product price index and the raw material product index both edged down mainly as the result of lower oil prices. GDP grew more quickly than anticipated, expanding by 0.7 per cent between June and July. The contribution from services was nearly twice as big as that from goods manufacture; energy was the largest contributor.

The data and events to watch in Canada this week will be the housing data - building permits, housing starts and the new housing price index. In London an interest rate cut is a real possibility. Given the disconnect between the Bank of England's official rate and the actual cost of borrowing in the wholesale market, some analysts believe there would be no point in lowering rates by the usual quarter percentage point. They argue that only a cut of 50 basis points - or even more - would have any effect on the real cost of money or on public psychology. Would such a move hurt the Pound? In normal times yes, but in the current circumstances it could be seen as a decisive and progressive step for the economy, in which case it would be positive for Sterling.

But there are too many imponderables out there to allow any hard and fast prediction of where Sterling/Loonie will be next week. Buyers of the Canadian Dollar still have little alternative but to hedge their risk by buying half the currency they will need.

EGY Egypt Pound

JPY Japan Yen

Carry Trade RIP
- Dismal economic data everywhere
- UK rate cut likely this week

The Pound was falling swiftly through ¥193 at the beginning of last week and was ten Yen - 5 per cent - lower by Friday. It touched below ¥181 in early trade today and was looking nervous at ¥182 when London opened.

The one good figure delivered by the Japanese economy was a 53.6 per cent increase in the number of housing starts between last August and this. The astonishing leap came about because of the plunge a year ago when new building regulations came into effect, all but stopping the construction industry in its tracks. As for the rest of the data, they were mostly grim. Unemployment was up: household spending, industrial production, construction orders, earnings and vehicle sales were down.

The Yen was up. There were two main reasons. Japanese banks have been wary of mortgage-related assets since their experience in the eighties and nineties when the property bubble meant the Emperor's palace was worth more than California (the state, not the hotel). There is therefore not the whiff of fear in Tokyo that is to be found in New York, London, Frankfurt and elsewhere. The other factor is the disappearance of the "carry trade". With credit in such short supply investors are not going to waste it on borrowing Yen to buy higher-yielding currencies.

The main even in the coming week will be Thursday's interest rate decision in London. Upward pressure on inflation has all but evaporated and a UK interest rate cut this week is a real possibility. Given the disconnect between the Bank of England's official rate and the actual cost of borrowing in the wholesale market, some analysts believe there would be no point in lowering rates by the usual quarter percentage point. They argue that only a cut of 50 basis points - or even more - would have any effect on the real cost of money or on public psychology. Would such a move hurt the Pound? In normal times yes, but in the current circumstances it could be seen as a decisive and progressive step for the economy, in which case it would be positive for Sterling.

But there are too many imponderables out there to allow any hard and fast prediction of where Sterling/Yen will be next week. Buyers of the Yen still have little alternative but to hedge their risk by buying half the currency they will need.

NZD New Zealand Dollar

Better NZ data but no banana for Kiwi
- Dismal figures from Britain
- UK rate cut this week?

Sterling was no more adventurous than in the two previous weeks but it did make a little headway, adding three and a half cents to open this morning in London at $2.7050.

As is often the case, data from New Zealand were somewhat thin on the ground. Mirroring the trend in Australia and most of the world, residential building consents were down by 8 per cent in August. Non-residential consents continued their recent upward trend but remain lower than a year ago. Business confidence jumped into the black in September; it was the first time in six years that firms had not been at least slightly pessimistic. Employment sentiment also improved in the third quarter. Staff see their current position as having deteriorated but believe things will get better in the future.

The most telling - and most current - figure was the one showing a 5 per cent fall in world prices for New Zealand's commodity exports. With a global recession looming there is likely to be less demand for raw materials. The decline is likely to have a negative impact on all commodity-based economies and their currencies.

The other downward pressure on the Kiwi, that of falling interest rates, might be offset this week by Thursday's interest rate decision in London. Upward pressure on inflation has all but evaporated and a UK interest rate cut this week is a real possibility. Given the disconnect between the Bank of England's official rate and the actual cost of borrowing in the wholesale market, some analysts believe there would be no point in lowering rates by the usual quarter percentage point. They argue that only a cut of 50 basis points - or even more - would have any effect on the real cost of money or on public psychology. Would such a move hurt the Pound? In normal times yes, but in the current circumstances it could be seen as a decisive and progressive step for the economy, in which case it would be positive for Sterling.

There are too many imponderables out there to allow any hard and fast prediction of where Sterling/Kiwi will be next week. Buyers of the New Zealand Dollar still have little alternative but to hedge their risk by buying half the currency they will need.

CHF Swiss Franc

Washington hogs the headlines
- Dismal economic data everywhere
- UK rate cut this week?

Sterling looked in poor shape as it fell through SFr 2.00 last Monday. It went quickly down to SFr 1.96 before bouncing all the way back the following day. For the rest of the week it explored a wide range between SFr 1.98 and SFr 2.02. It opened in
London this morning unchanged on the week at SFr 2.0050.

In an effort to remind the world its economy is in better shape than most, Switzerland's manufacturing PMI scooped the pool on Wednesday. Unfortunately, it was down by nearly five points and well below the boom/bust divide. Except for Friday's CPI inflation figure, steady at 2.9 per cent, the Swiss Franc had little else to say for itself during the week. The pickings are even thinner this week with just September's unemployment figures to come.

Things could be more interesting in London, where upward pressure on inflation has all but evaporated an interest rate cut is a real possibility on Thursday. Given the disconnect between the Bank of England's official rate and the actual cost of borrowing in the wholesale market, some analysts believe there would be no point in lowering rates by the usual quarter percentage point. They argue that only a cut of 50 basis points - or even more - would have any effect on the real cost of money or on public psychology. Would such a move hurt the Pound? In normal times yes, but in the current circumstances it could be seen as a decisive and progressive step for the economy, in which case it would be positive for Sterling.

But there are too many imponderables out there to allow any hard and fast prediction of where Sterling/Swiss will be next week. Buyers of the Swiss Franc still have little alternative but to hedge their risk by buying half the currency they will need.

USD US Dollar

US rescue program buoys Dollar
- Dismal economic data everywhere
- Could there be a UK rate cut this week?

The Pound looked heavy when it opened at $1.8150 last week and it never got as high as $1.82. It bounced from $1.7550 on Thursday and had pulled back three cents by the end of Friday but it was back down at the lows when London opened this morning.

But there are too many imponderables out there to allow any hard and fast prediction of where Sterling/Dollar will be next week. Buyers of the Dollar still have little alternative but to hedge their risk by buying half the currency they will need.

ZAR South African Rand

Washington the focus of attention
- Dismal economic data everywhere
- Interest rate decisions this week

Sterling made further progress, rising from R14.8 last Monday to open this morning in London at R15.2, its high for the seven days. There was no clear trend and the Pound touched a low of R14.5 in mid-week.

It was a bumper week for South African data with figures for lending, the balance of trade, the manufacturing PMI, vehicle sales and house prices. Most delivered no surprises. Vehicle sales were down by nearly a third in the year to August, in line with the global trend. Private sector credit grew much more slowly over the same period. South Africa's trade deficit narrowed during the month, helped by an increase of more than 40 per cent in the value of exports over the year.

The figure that did surprise was the 3.6 per cent annual increase in Standard Bank's median house price index, bucking the recent downward trend for property prices. Analysts believe it was a flash in the pan rather than an indicator of better times ahead.

The South African Reserve Bank and the Bank of England both gather this week to consider where next for interest rates. With the possibility of recession dampening commodity and energy prices both banks will be more inclined to see current inflation rates as a temporary phenomenon. For the SARB this will probably mean another month of no change. In London a rate cut is a real possibility. Given the disconnect between the Bank of England's official rate and the actual cost of borrowing in the wholesale market, some analysts believe there would be no point in lowering rates by the usual quarter percentage point. They argue that only a cut of 50 basis points - or even more - would have any effect on the real cost of money or on public psychology. Would such a move hurt the Pound? In normal times yes, but in the current circumstances it could be seen as a decisive and progressive step for the economy, in which case it would be positive for Sterling.

But there are too many imponderables out there to allow any hard and fast prediction of where Sterling/Rand will be next week. Buyers of the Rand still have little alternative but to hedge their risk by buying half the currency they will need.

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