Summary Of World Currency Markets For January 2010

Monday February 8, 2010

Here we are then with the first report of the New Year.  But was it a good start for the various currencies as far as the currency converter was concerned, or would it be a bad one?

The US dollar certainly finished the old year on a good note as it managed to pile on a cent against the beleaguered British pound.  This left it on 0.6164 as the year came to an end – although the dollar had lost a total of nearly one and a half cents across the last day of trading.  So was this setting up a bad start to January or was there better news in store?

The US dollar had also finished well against the Euro as the old year came to a close.  Here it had added on more than two and a half cents across the final month, even bearing in mind the shortened Christmas period.

The US dollar continued its good fortune for the month in Hong Kong too, where an increase of 0.0042 was on the cards.  And even the Japanese yen didn’t have anything in reserve to try and stop this good run of results for the US dollar.  By the end of December the dollar had piled on an impressive 6.053 against this particular currency.

But would this grand end to the year be replicated as the new one got underway?  Or would the US dollar struggle to repeat those results and end up back down with lower exchange rates as well?  Let’s find out as we look back on how 2010 got started.

An overview of the currency markets during January

Could the dollar do well once more?

We have seen how well the US dollar did in December.  But the passing of a single month can lead to many changes in the currency markets.  And would it lead to many changes for the US dollar too?

Our opening rate between the US dollar and the British pound was 0.6164.  The dollar had done well during December and we were looking for an equally strong start now that the New Year was underway.

It didn’t take long for the dollar to start making inroads on the pound once more.  By the 5th of January the exchange rate was up to 0.6234, giving us hope that we may continue where we left off the month before.  The rate climbed still further to a week long high of 0.6289 before tailing off slightly on the final day and closing out the week on 0.6259.

So what would the next week have in store?  So far things still seemed to be going in favor of the US dollar, but things can change very quickly in the world of currency and nothing can truly be certain for any real length of time.

This was borne out by the closing rate on the following Monday which had slipped down to 0.6187.  This was not a big loss but it did show that perhaps we were looking at a very different month to the one we had seen previously.  January may not turn out to be just like December was as far as the dollar was concerned.

In the end the week ending the 15th January was a very up and down affair, with neither side giving much ground for any length of time.  This was shown by the closing rate of the week which was 0.6129.  How on earth could we hope to make any real headway against the British pound if the exchange rates were simply going to keep going up and down like this?

The Monday of the following week didn’t bode well either, as the dollar fell back to 0.6120.  The pound certainly seemed to have more fight in it this month than it had the month before, although we were still only halfway through the month so there was a long way to go yet before we could cast judgment on how the month would turn out as a whole.

The end of the week saw a bit of positive news for the dollar though as it crept up to 0.6199 – just shy of the 0.62 region it would have liked to regain.  And finally on the 26th of the month it managed to do just that and closed out the day on 0.6200.  Even this was only marginally there though, which gave us the feeling that it would not last.

And indeed that was the case as the following day saw the dollar slip back below that rate once more.  Luckily though, the final exchange rate of the month went well for the dollar, because it claimed a rate of 0.6204 to bring the month to an end on a good note.  This meant the dollar had managed to add on a tiny amount during the course of the month – a total of 0.004 all in all.  But it was certainly better than nothing.

So could the dollar do just as well elsewhere in Europe, where the Euro waited for it in the hope that it could turn around its own fortunes this time?

Last time we saw the Euro receive something of a battering by the US dollar, as the dollar closed on 0.6941.  The first few days of the month didn’t give us much to report on, but the 8th brought some better news as the dollar claimed a total of 0.7006 Euros as the exchange rate.  Was this a sign of more good news to come?

The answer appeared to be no as the following week saw an immediate dip down to 0.6883.  It was back up to 0.6905 the next day though before a choppy week saw the dollar close on 0.6957.

But the 19th proved to be a notable date because the US dollar regained an exchange rate of 0.7003 – and it would not dip back below the 0.70 region for the remainder of the month.  That was a blow for the Euro although of course it did not know it at the time.

Although the US dollar climbed up beyond 0.71 on the 21st of the month it went back below it again until the 27th, when it claimed an exchange rate of 0.7106.  Once it got it that was it – the exchange rate did not dip below that level either.  The closing rate for the month was 0.7160, a full 0.0219 higher than it had started off.

So with that good news under our belts it is time to move over to Hong Kong, where the US dollar finished 2009 on 7.7543.  Could it do better still this time?

The first notable date here was the 18th when the dollar managed to break through an unseen barrier and claim a rate of 7.7617.  But would it remain above 7.76 as the month went on?

Not only did it remain above it, it climbed higher still on the 22nd of the month and finished the day on 7.7712.  The Hong Kong dollar did manage to knock it back a peg or two by the time January was over, but the US dollar still managed to stay on 7.7667.  So it had added on 0.0124 overall, which was another good month worth talking about.

Our final stop for the US dollar this month is with the Japanese yen, and the US dollar finished on 92.433 last year.  Having added on 6.053 across the whole of December it would be interesting to see whether the dollar could achieve a similar feat for another month.

After a fall to 91.773 on the 5th, the dollar bucked its ideas up and closed the week on 93.435.  But things wouldn’t stay that rosy and just one week later the Japanese yen had fought back.  The dollar was left nursing its wounds and claiming a total of 90.969.

The month never really got much better after that, and every time the dollar tried to make an advance the yen beat it back down again.  A figure of 89.676 on the 26th told the story, but the dollar did at least manage to haul itself back up and finish the month on 90.326.  So it had lost a total of 2.107 this time around.

Meanwhile, over in Europe…

It’s time to see how the British pound did against the Euro now.  On the final trading day of 2009 the Euro was bagging 0.8881 against the pound, having had a poor month all in all.  And as it turned out January would not get much better either.

The Euro did get off to a good start by achieving a rate of 0.9004 on the 5th.  But that dropped back to 0.8986 the very next day so there wasn’t a lot to celebrate for very long.

Things stayed around the 0.89 mark until the 15th of the month, when the pound started to turn the screws and the Euro dropped back to 0.8810.  A couple of days later that figure was forgotten as a new one - 0.8795 – took its place.  And there was still worse to come as a lowly 0.8692 was recorded on the 20th.

When the Euro popped back up to 0.8700 the very next day it looked as if things could be getting better.  But the true tale of the month was told on the 27th January when 0.87 gave way to 0.86, and the final rate was recorded eventually as 0.8665.  So the Euro lost a total of 0.0216 against the pound.

Elsewhere last month…

The Australian dollar lost four cents in December against the New Zealand dollar, leaving it on 1.2370 as the month came to a close.  So what could it do during January?

That figure climbed to 1.2441 on the 4th and still further to 1.2514 on the 7th, but there was more in store yet.  The 20th of the month saw the Aussie dollar claim a new rate of 1.2662 against the Kiwi dollar, and it closed out that week on 1.2703.

The final rate of the month turned out to be slightly lower on 1.2642, but the Aussie dollar had still managed to turn on an impressive performance over the whole month.  In total it had added on 0.0272 against the Kiwi dollar.

Elsewhere the Canadian dollar had an equally choppy month against the Icelandic krona – although the result was very different.  It claimed 118.985 krona on the 1st of the month, and the high point of 121.965 was reached halfway through the month just two weeks later.

After that point things took a turn for the worse and dipped back down to 119.772 on the 25th.  Even a rate of 121.069 on the 28th couldn’t prevent a slide to 119.108 on the final trading day of the month.  This meant that while the Canadian dollar did come out on top for the month as a whole, it could have been a lot better if it had managed to hold onto that mid-month rate.

Looking forward

So it was an interesting start to the New Year as far as the US dollar was concerned.  It looked as if it was going to have a great month but for the disappointing result against the Japanese yen, but we should count our blessings and be grateful for the good results it did manage to bag.

But what of February?  What will happen next as we move forwards out of the recession?  How will all the world’s currencies react against this new chapter in the world currency markets?  It will be interesting to see how they develop now, since they have seen some interesting times of late.

Will the US dollar manage to have another reasonably good month or will other currencies do better for once?  The US dollar isn’t guaranteed to be the top dog at any point so we will be watching for any signs of any currencies that look set to have a good month against this particular currency.