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Euro unchanged on Sandy, presidential election

Uncertainty over the impact of Hurricane Sandy and the US presidential election led investors to hedge their bets this week.


Welcome to the Pure FX account of changes in the euro exchange rate, covering the 26th October to 2nd November 2012. This is intended as a brief guide to movements in the euro this week, to put you in the best position for when you exchange currencies.

Exchange rates

Pound to euro: 1.2476
Pound to US dollar: 1.609
Euro to US dollar:  1.2896

As you can see above, the exchange rates stand unchanged this week, with the pound still close to its highest rate against the euro since early October. This largely reflects two things: one, the impact of Hurricane Sandy on the North Coast of the US, including the States’ financial centre of New York, and two, the Presidential election next Tuesday, whose outcome remains anyone’s guess. These things introduced a good deal of uncertainty this week, leading investors to hedge their bets, and hold off until things grow clearer.

How does this affect you

Well, while it means the exchange rates haven’t improved, they’re also no worse. The pound, for instance, sits at its highest point against the euro in four weeks as I mention, benefiting you if you plan to buy property in Spain or Portugal. This is because, the higher the pound, the greater the euro total you can obtain when you exchange currencies. Furthermore, sterling is also close to a month’s high against the US dollar too, where the same point applies.

What affected the rates this week

The biggest thing to affect the foreign exchange market this week was Hurricane Sandy. The hurricane did untold damage to the North East of the United States, affecting New York, New Jersey, and Connecticut the most. In the US, 57 people died as a result of the hurricane, while up to six million are still without power. In addition, it’s worth noting that Sandy hit both Cuba and the Caribbean, where up to 71 people have so far died. Of course, our thoughts are with those affected.

This affected the exchange rates because, first, New York is the United States’ financial centre. Both the stock and equities markets there were therefore closed on Monday and Tuesday, dramatically cutting the number of people participating on the markets. Secondly, even for those outside of New York, the uncertainty introduced by Hurricane Sandy, made it sensible to hold off trading, until the worst of the storm had passed, and its impact could be assessed.

What’s going to happen next

Next week will be about the foreign exchange market returning to normal, as we digest the impact of Hurricane Sandy, and the nine-month long Presidential campaign is finally put behind us. What does that mean for the rates? Well, it could mean the euro falls, as the Eurozone debt crisis again takes centre stage, focusing on Greece (still due a bailout tranche) and Spain (whose forthcoming bad bank has been widely criticised.) If that were to happen, it would be an advantage if you intend to buy euros, as the rate improves.

Get in touch: I do hope you’ve enjoyed reading this update. To find how what I’ve talked about here will affect your euro transfers, fill in your details into the form below. I’d be delighted to answer any questions you may have.

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Peter Lavelle is an economist at foreign exchange broker Pure FX. For a free no-obligation quote regarding changing currencies, get in touch at foreign exchange specialist Pure FX.

Copyright: Peter Lavelle, Pure FX
Category: Expats
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