For instance, if your life is anything like mine, then you’ll probably occupy the same rooms, see the same people, and use the same objects, day in day out. This is neither good or bad, but just how daily life is. It’s pretty constant.
But if you were to look at the foreign exchange world this week, you might come away with the impression that the world had completely changed within the span of seven days.
To whit, the euro has shot up against the pound and US dollar, gaining more than a cent against them both since last Friday.
Now, I know that might not sound too significant, but a cent movement is pretty big. For the euro to move that much in a week, there have to be real changes in the global economic outlook.
(In fact, this is one of my favourite things about the foreign exchange market. You can look to see if the rates have changed, and if so, you know that, somewhere in the world, something important has happened.)
What do these changes involve? Well, chiefly of benefit to the euro, Chinese manufacturing has picked up. HSBC’s survey of activity in China’s manufacturing base jumped to 50.4 for November, above the 50.0 point that signals growth. This is the first time that has happened in 13 months.
Now, again, like a one cent change in the euro, that might just seem likely a number changing on a screen. One day, Chinese manufacturing is at 49.6, the next it’s 50.4. So what, you might say?
But really, I think it’s huge. If you think that there’s a billion people in China, there’s got to be tens of millions of them working in factories. We’re talking the population of the UK, I don’t know how many times over.
And over the course of 30 days, businesses all over the world decided that demand for their products had gone up just enough, that they would increase their orders to China.
And as a result, tens of millions of Chinese worked a little extra in the course of November, individually producing just a little more, that in total must add up to millions of extra products.
All of which, adds up to lifting the entire Chinese manufacturing base, the biggest in the world, out of recession, back into growth.
And that’s probably fantastic for the people working in those factories, who now face less chance or losing their job, or more chance of a pay rise.
So, like I say, you might be at the office, or at home, where generally life is pretty constant. You might turn on your computer to check the exchange rates, and see, ‘Oh, the euro is up a cent against the pound and dollar this week.’
That might be enough to tip you into moving money to the UK, or booking a holiday in the States.
But, though for you it’s a pretty small change, in reality, it reflects some epic occurrences across this whole wide world of ours.
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, please fill your details into the form below. I’d be delighted to answer any questions about foreign exchange you may have.
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