Foreign Currency Update

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Foreign Currency Update.

Although theU.S. Dollar fell in the wake of even more Federal Reserve statements that it will be “more patient” with interest rate rises, it has since risen quite strongly to retest its highs. The DXY U.S. Dollar index, (an index that measures the U.S. Dollar’svalue against six major currencies), fell to a low of 95.34 before putting on a sharp rally that took it to 97.05. Against the Thai Baht,and even in spite of the DXY strengthening the Dollar lost ground to move from 31.88 to 31.32, indicating that the Thai baht itself is seeing real strength of late, even in excess of the U.S. Dollar strength.

The British Pound rose from 1.2903 to a high of 1.3203 against the U.S. Dollar due to the initial Dollar weakness, but fell back to 1.2849 as the U.S. Dollar strengthened again. Interesting is that the moves have been mainly Dollar driven rather than Pound driven, meaning that although Brexit is still a driver of the British Pound’s fortunes it has had a muted effect of late. That could change as Brexit deadlines draw nearer. Against the Thai Baht, the pound rose from 41.31 to 41.68, but quickly gave back those gains as the Thai Baht strengthened, to hit a low of 40.24, coming close to levels not seen for almost 20 years.

The U.S. Dollar vs. Japanese Yen cross ratemirrored the move of the U.S. Dollar higher but also weakened when the Dollar moved lower. Overall, the Yen rose from 108.51 to 110.48 to the U.S. Dollar. Of course when the Yen rises against the Dollar it is actually the U.S. Dollar getting stronger and the Yen that is getting weaker because a rise indicates that a U.S. Dollar can buy more Yen. Against the Thai Baht, the Yen moved down strongly from 0.2932 to 0.2812 indicating again that the Thai baht has strengthenedagainst almost all currencies by an amount that is close to three per cent.

The Russian Ruble strengthenedagainst the U.S. Dollar moving from 67.23 to 65.59. This occurred even while the U.S. Dollar was gaining ground and so it can be seen that the Ruble has strengthened at an even faster rate than the Dollar. This is further evidenced by the fact that the Ruble has held up well against the Thai baht having been absolutely flat, trading in a tight range of 0.4733 to 0.4776.

The Euro vs. the U.S. Dollar cross rate has shown Dollar strength and Euro weakness with the Euro dropping from 1.1467 to 1.1282. Against the Thai Baht the drop is almost double that magnitude, as it takes into account additional Thai baht strength. The Euro moved in a straight line without any retracement from 36.59 to 35.29 to the Thai Baht, another three per cent drop on top of the three per cent drop seen last month, settling at a multi-year low.