Summary Of World Currency Markets For September 2008

Wednesday July 8, 2009

As we saw during our look at August’s markets last month, this is clearly not a time of good results for many currencies.  In fact the markets are so up and down at the moment that you could be sitting in front of your computer, seeing how far your cash would take you in other countries with the help of a currency converter, and the picture could well be changing by the minute.

The problem with this situation we are in at the moment is that world economies are continuing to struggle and the thought and possibility of recessions in various countries just isn’t going away.  We can reasonably expect to see a similar picture during the next few months at least, and even if things seem to be getting better over the course of a month we would have to see improvements over a much longer time span than that to really feel as if things were on the mend.

So with that cautionary note, let’s take a look at what was happening in the currency markets during the month of September.

An overview of the currency markets during September

The US dollar goes head to head with the British pound – and wins
We had a look at the situation between these two currencies last month, and we saw just one thing – the US dollar was continually coming out on top.

By the end of August the dollar had improved its exchange rate with the pound by over four cents, leaving us to wonder what would happen during September.

The starting rate left over from August was 0.5463 dollars to the pound, and by the end of the 1st of September that had improved still further to 0.5551.  It almost seemed as if the biggest question for September was going to be how far the exchange rate could go in favor of the dollar.

If truth be told, on the very next day the exchange rate headed into 0.56 territory – and it stayed there until the 16th of the month, when it fell back slightly to 0.5589.  And in actual fact although there was no doubt that the US dollar was still on top of the situation and still very much in the driving seat, it did not manage to regain the 0.56 figures for the rest of the month at all.

It slipped down to 0.5477 on the 18th, before pushing back up to 0.5530 just in time for the weekend.  The following week was probably the only real blip in the month as far as the US dollar was concerned, as things started by going back down to 0.5435 on the Monday, before falling back further to 0.5397 the very next day.

But although the dollar had to make do with exchange rates in the 0.53 range during the whole of the middle of that particular week, it managed to recover some ground and regain a rate of 0.5428 by the close of play on the Friday.

And by the time the last couple of days of September had arrived, it looked very much as if the US dollar was back in the driving seat once again, with exchange rates of 0.5546 and 0.5525 respectively.  When it comes to the tussle between the US dollar and the British pound, there is no doubt as to which currency is proving to be the strongest at the moment, and that is undoubtedly going to continue for a while at least.

So let’s carry on with our comparison of September against August this time around, and see how the dollar did when it went up against the Euro.  Was it as strong there as it was against the pound?

It was certainly the dollar that had the upper hand during the month of August, so the real question was whether the pattern would be repeated during September.  The first day of the month ended with an exchange rate of 0.6839, but the dollar soon pushed things forward and accelerated its performance to claim 0.6924 by the end of the 3rd.

But there was still plenty more to come, because the dollar really exerted some pressure on the Euro to result in pushing through the 0.70 barrier by the end of the first week of September, resulting in an exchange rate of 0.7019.

And in the end the question became not one of how long the dollar could hang on to the 0.70 rate, but how long it would be before it pushed up still further to break through the 0.71 barrier.  That occurred on the 11th, when it claimed a rate of 0.7176.

That would prove to be the peak of the month’s figures though, because although it dipped back down before reaching the heights of the 0.70 region again, it would never get near 0.7176 again – not during September at any rate.

The last full week of September saw a range of figures in the 0.67 and 0.68 region, before the US dollar put in a last burst of effort to round off the month with an exchange rate of 0.6991.  Not a bad performance over the course of the month, and it is still clear that between these two currencies it is the dollar which is nosing ahead all the time.

From there we move on to see how the US dollar did against another dollar – this time from Hong Kong.  During August it was all quite close, with each country nudging ahead before being pulled back.  Would September turn out to be the same?

As it turned out, the answer was no.  The US dollar started with an exchange rate of 7.8062 against the Hong Kong dollar, and it stayed in that region before dropping to 7.7996 on the 9th of the month.

Then it steadily lost a little more ground virtually each day until it hit 7.7617 on the 23rd September.  The US dollar did manage to exert enough authority to pull things back into the 7.77 range a few days later, but after that it fell back again to end the month on 7.7692.  So here at least it seems as if the Hong Kong dollar had what it took to go head to head with the US dollar and actually come out on top.  Will this be a pattern that continues or is this the best it can do?

Finally, let’s see how the US dollar did against the Japanese yen.  This turned out to be a real rollercoaster affair, as the ups and downs that would be a constant feature of this month became evident.

107.87 was the exchange rate on the 1st September, and while the US dollar pushed things up to the 108.0 level the very next day, the yen soon fought back and an exchange rate of 108.19 on the 4th was brought back to 106.36 the very next day.

From there it was back up to 108, then back down to 106 again, and so it went on for several days, with figures anywhere between 108.63 and 103.78, which was the lowest point of the month on the 16th.  We never saw 108 exchange rates for the rest of the month though, and the last day saw an exchange rate of 105.20 – a slight drop on the start of the month, although considering the ups and downs we had seen it wasn’t too bad overall.

Meanwhile, over in Europe…

Neither the pound nor the Euro have been having a great time of it of late, and when the two of them went up against each other during August it was the Euro that just about made it out on top.  Would September prove to go the same way?

At the end of August the Euro was claiming 0.8050 pounds, and September started with it pressing the advantage to increase that to 0.8116.  But the advantage would not stay with the Euro during the whole month, as it turned out.

It dropped steadily during the month and while it hit 0.78 territory at one point it finished up at 0.7903 on the last day of September.  Not a huge difference but at least this was one situation where the British pound was out on top once more.

Last month we compared the Euro against the Hong Kong dollar as well, but since the British pound won the day against the Euro we’ll see how that did against the Hong Kong dollar instead.

After starting the month at 14.062 it dipped into 13.9 territory the very next day, but although it stayed in that area for a while, it crawled back up to 14.203 on the 18th.  After dipping to 13.998 on the penultimate day of the month the pound pushed back through the 14.0 barrier to finish on 14.060 on the last day of September.  Not a bad month, and at least it didn’t lose a lot of ground.

Elsewhere last month…

The Japanese yen had a very up and down month against the Hong Kong dollar, and while it remained in the 0.07 region all month there was a real tussle over exactly where it sat in that region. 

It started off at 0.0723 and finished at 0.0738 though, so over the course of the month there was a slight improvement.  If you were to take a look at any graph showing you the daily ups and downs of this particular pairing last month you would have seen a real tussle that isn’t revealed in the actual figures.

In comparison the struggle between the Australian dollar and the New Zealand dollar last month was more pronounced.  The New Zealand dollar claimed 0.8170 Australian dollars on the 1st September, although it managed to push that up into the 0.82 region shortly afterwards.

After briefly hitting 0.8306 on the 10th of the month it fell back into 0.81 territory again, although it did manage to enjoy a period of four days from the 18th to the 21st with figures in the 0.83 region again.

From there it slid back to a lower exchange rate but the last day of the month saw the New Zealand dollar claiming 0.8390 Australian dollars, so it clearly had enough energy to reclaim the higher ground by the end of September.

Looking forward

September has certainly been an interesting month overall.  It doesn’t seem to have been full of alarming extremes as we sometimes see, although week on week it has had some challenging periods. 

Quite often you will see figures dropping in a certain region for the space of a week or so, before pulling back up to a more respectable level again.  In some currency pairings it is quite clear who has the upper hand – perhaps the most obvious example in this case is the pairing between the US dollar and the British pound at the moment – but with so many others it rests entirely on what is going on within those particular countries at that moment in time, and how much faith lies with each one.

One thing is certain above all else though, and that is the fact that the climate in general is still very uncertain.  Who can tell where we will be in a month from now?  While certain currencies are definitely having a harder time than others, none of them are safe from extremes of currency exchange that are always happening on the market.

When events happen in certain countries that point to a flagging economy in that region, we can expect those events to be mirrored in the currency markets.  And with changes and doom and gloom still pervading this market at the moment there doesn’t seem to be any chance of any immediate changes for good in the near future.

It seems as if we will just have to keep on going and make the best of the situation we are in, and although this might not be the best time to get started in Forex trading if you have an interest in it, who knows, you might learn a lot from keeping tabs on what is going on.

See you next month!