 Poster: A snowHead
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better than expected GDP quarterly figures issues at 9.30 am today has sent £ flying up !!
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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I'm sure I read an article on the beeb saying the exact opposite at about 9.29 this morning. 
I bet they pulled that one when the figures were actually published.
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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rayscoops, flying up? I don't think so. Up .01 I see. I imagine the BofE and the government will continue to keep the £ competitive against the €.
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You need to Login to know who's really who.
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achilles, 00.01 ?
It’s actually moved 0.0200 which is near enough 1.75% which for a short term intraday move is quite a lot - however by historical standards FX volatility is much lower than the 1980's and 90's when USD/DEM traded 2.75% volatility per day on average with 4% not at all unusual.
Moves nowadays in currencies are perhaps contrast volatility in most other contracts/commodities which are mostly higher.
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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Jivebaby, currently the BBC ticker is showing +0.0142. I imagine - and for my employer hope - that the UK will continue to out-manoeuvre the Eurozone to keep the rate lowish.
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achilles, 150 points or 1.30 percent is/was a big move !
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rayscoops, maybe. Now +0.0155
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| achilles wrote: |
| Jivebaby, currently the BBC ticker is showing +0.0142. I imagine - and for my employer hope - that the UK will continue to out-manoeuvre the Eurozone to keep the rate lowish. |
How will that benefit the UK, being that we are a net importer of goods?
Also, as this is a ski forum, how will that benefit anyone wanting to go skiing to Europe?
The correct value for the pound (IMO) would be around 4 Euros to the Pound 
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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| Quote: |
The correct value for the pound (IMO) would be around 4 Euros to the Pound Shocked
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Let's have that for around, ooooh, 8 weeks across December and January. Then once I'm a (euro) millionaire, it can go back down again before everyone else in the UK ends up on the bread-line! 
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| Wayne wrote: |
| achilles wrote: |
| Jivebaby, currently the BBC ticker is showing +0.0142. I imagine - and for my employer hope - that the UK will continue to out-manoeuvre the Eurozone to keep the rate lowish. |
How will that benefit the UK, being that we are a net importer of goods? |
By reducing the cost of services, and encouraging UK manufacture.
| Quote: |
| Also, as this is a ski forum, how will that benefit anyone wanting to go skiing to Europe? |
By keeping people in jobs so that they can go skiing. Mind you, if the snow is decent up in Scotland, one of my weeks may be up there, rather than on the Continent.
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| The correct value for the pound (IMO) would be around 4 Euros to the Pound |
Only in the wet dreams of TOs.
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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| achilles wrote: |
| By reducing the cost of services |
No it doesn't
| achilles wrote: |
| and encouraging UK manufacture. |
Manufacturing what?
And whilst we're the subject - Exporting What?
OK am waiting for someone to popup with “well we make bird-baths and sell them all over the world”, “my company has benefited by the low pound as we can now sell London made Back-Scratcher-O-matic to the Europeans”, “The French just adore my pickled Nettle Jam and now the pound is so low …..” "blah blah blah
I'll say it again – dead slowly so even the dim-wit chancellor and his boss(es) can understand it.
We import more than we export so a low valued pound is a bad thing.
and makes "most" ski holidays cost more
even call-me-Dave and Nick-never-had-a-job can understand that much, surely….obviously not
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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Wayne,
Sweetheart, just because your business is taking a caning, it doesn't mean that UK-based business as a whole is going down. Services (such as, dare I mention it) banking for international customers, tourism, and hotel beds for international customers are cheaper. Manufacturing is doing well. At our factory, we have lost one, and taken on two members of staff. The cost of holidays matters far less than the ability to pay for a holiday in the first place. The chancellor a dim wit? A 2:1 from Magdalen may not mean that he is the brightest on the planet, but it certainly doesn't make him the dimmest. How do you compare?
Last edited by And love to help out and answer questions and of course, read each other's snow reports. on Tue 26-10-10 17:21; edited 1 time in total
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Looks as though the 'dim-wit' chancellor and the B of E have got it right about the exchange rate for manufacturing.
| The Office for National Statistics wrote: |
| Manufacturing: August shows annual increase of 6.0% |
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You know it makes sense.
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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Quantitative car boot sale anyone
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Gordon already did that with the gold reserves
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Poster: A snowHead
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'Crown Currency. Now there's a blast from the past!'
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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Who knew people could get so fired up talking about currency exchange rates!
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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| Timmaah wrote: |
| Who knew people could get so fired up talking about currency exchange rates! |
A company that used to bring people to our resort (about 4 hotels) went bust 2 years ago even though they were fully booked. The pound dropped and so they couldN'T afford to buy the Euros they needed to pay the hotels.
Real people, real problems.
Currency fluctuation does affect TO's IN A BIG WAY.
It's not so bad for us as of the 25,000 to 30,000 people per year we take on trips only a small % are on ski trips - we actually take more people to Peru than we do to Italy - mind you the Sol is linked to the $US so we watch this as well.
The Yorkshire trips are also affected by the fluctuation is the cost of black puddings of course 
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good GDP data has sent £ rising, broken up through the 20 day MA so a lot of the 'sell' pressure has been released, heading up towards the 40 day MA which may mean bit a rise, until some other good/bad data comes out 
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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OK The Germans are pulling there mighty power on the Euro.
Now the Markets know the Germans are in control in the Front seat The Euro will get stronger & stronger 
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For those that seem to know - when contracting for goods (buying) in the Eurozone from the UK, what would one expect the exchange rate to be? Is there a business rate (as I'd imagine) or does one tend to take the travel exchange rate? There are two parts to this - 1) buying skis from Germany 2) buying a holiday from a UK-based operator who has committed to accommodation stock in Euros and makes adjustments to the price to reflect exchange rate fluctuations.
Thanks
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Now the german have spilt the beans this morning we've just taken out a large forward at rate watch of 1.21 - now we'll see???
Mind you as the next yeald will be done at 1.1835 it'll be just my luck that the money grabbers in the city will profit take just before that grrrrrr
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Wayne, balls on the block eh !!
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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Chasseur, the company I work for runs a Euro account. I imagine your UK-based holiday company will, too - so won't be paying tourist rates, but will have to absorb the costs or running the account.
stanton. I assume the Germans will want the Euro to be low. Same goes for the UK government with the Pound. Interesting times.
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rayscoops,
Not really, would be happy with that.
Went to "just" below the spot rate (0.002 to be exact) of a new yield today so will wait and see what happens next week
It's the small TO's I feel sorry for. I know one guy (good mate, known him for years) running trips to Nepal and he is in the s**t for bookings he's already taken for 2011 summertime if the £ doesn't go up by around another X% against the $. In the ski world, Sortability Ski used to bring loads of people to our resort until last year when they got wiped out by the euro/pound stuff. Regardless of what happens with the rates it wouldn't affect our ability to provide but for smaller TO's there must be sleepless nights around now.
It's all academic though as I am going to win the lottery on Sat
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snowHeads are a friendly bunch.
snowHeads are a friendly bunch.
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I'm going to throw a guess at the rate being ~1.22 in six days time.
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And love to help out and answer questions and of course, read each other's snow reports.
And love to help out and answer questions and of course, read each other's snow reports.
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Timmaah, despite all the doom and gloom merchants yesterday, the Euro was actually rising against the pound at one point.
Much as I would like the pound to increase in value as 50% of my income is paid in Sterling, I think you are all grasping at straws.
The speculators will move currencies around for one reason and one reason only - to make as big a profit for themselves as possible and screw the world! 
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You know it makes sense.
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Wayne,
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I know one guy (good mate, known him for years) running trips to Nepal and he is in the s**t for bookings he's already taken for 2011 summertime if the £ doesn't go up by around another X% against the $. In the ski world, Sortability Ski used to bring loads of people to our resort until last year when they got wiped out by the euro/pound stuff. Regardless of what happens with the rates it wouldn't affect our ability to provide but for smaller TO's there must be sleepless nights around now.
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= Reckless or foolsih gambler who chooses not to cover risk
Samerberg Sue,
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| 50% of my income is paid in Sterling, |
= Fully aware and managing risk
The problem is that FX is a largely misunderstood world which most people, including people who work in banks, who for the purpose of this essay I do not classify as bankers on the same basis that people who assemble cars like meccano kits are not engineers. Branch bankers with whom most of us interface with a often looked upon as bankers - they are sometimes product "specialists" but more commonly ill informed and poorly resourced customer interface representatives. It is more sensible and indeed accuracte to consider them as shop assistants who do not know what products they stock or what is available to order.
FX rates are mostly influenced by "flows" (weight/volume of money) and movements largely correlate over the long term with a mixture of relative economic performance (relative inasmuch as it doesn't matter how good or bad we are individually, it's how we compare to our competitor peer group), FDI (Foreign Direct Investment) Political developments, Wars, Country Risk, Credit Risk etc....the myth that the city manipulates the rate is a widely held misconception based upon the similar arguments to the existence of the Yeti. I accept and openly admit that banks can exert significant influence upon markets but only for a very short period of time- I worked in these markets, specialisimg in emerging and illiquid markets and for short moments (sometimes minutes, hours or days) exerted and leveraged my experience and expertise to set pricing and dictate market rates for short, very profitable periods of time. In the real world it is much harder to do this in today’s electronic markets and even then was comparable to finding a needle in a haystack.
The bottom line is that your mate is gambling and hoping that the rate will go his way. This is a foolish way to run a business when he has the opportunity to take cover via FX spot, forward or option contracts. Critically, from a banking perspective, his bankers should (be able to) advise him on FX risk concepts, which at a branch level is extremely unlikely. On a larger systemic level this would prevent further losses/repeats of credit crisis etc. Ergo, they really should shut him down now before it gets worse and send him off to the Gambling addition centre. Better for him, better for them and so much better that shafting customers who are let down, losing holidays, cash or if very lucky just inconvenienced.
A practical example: When as treasurer, I had a customer request during a time of severe FX crisis/lack of supply, wanting to import paper/recycling machinery to manufacture essential packing locally. Ostensibly this would save Forex and in environmental terms this was also a great idea. In short, this sounded like a great idea.........We discussed the manufacturing pros and cons and I was more or less convinced that providing Forex for this project was a good idea.
Lastly, I asked about profitability and received a very vague answer, so I asked how he priced his finished product which was an easier concept. Simple answer was that he surveyed his direct competitor pricing for the same products and deducted 10%. Easy if you know how! A deep breath: I asked how do you know if you are making a profit? He rolled his eyes and confirmed that didn’t know (whether he made a profit or not). This revelation made my decision for me. I told him that until he had a firm understanding of his financial dynamics and knew for certain what his production costs/sales prices would be, it would be grossly irresponsible for the bank to extend facilities which would encourage him to gamble his business future upon. Sadly this analysis doesn’t happen that often (although the problem does!) and it is widely assumed that businesses understand the risk that they face. In reality this is far from true which is why we have topic on SnowHeads relating to FX rates, the Euro and tales of tour operators losing money because they did not cover their FX risks. Hammersmith and Fulham did the same when they borrowed in Swiss Francs at shall we say 1% when GBP rates were shall we say 10%. Great when sterling is constant at GBP 1 = CHF 3.00 but when it moves to £1.00 = CHF 2.00 The world is full of clever people who through ignorance, stupidity or arrogance or a combination of all three think they can do better than average. On the basis that they are gambling the split should be 50/50, however on balance Murphy’s Law kicks in with a vengeance and the split, as gamblers are largely unlucky/losers the split is more likely to be 40/60 or 30/70 against. Russian roulette is actually a lot safer!
As a professional and well experienced trader I would never “gamble” on FX rates and would advise anyone with cash and an ounce of common sense to avoid this gambling product like the plague and to take appropriate cover for their risks.
For balance, like some of the interested punters whether they are property owners, investors or businesses I do make investment decisions which involve significant personal risk, however they are in market terms, correctly priced and well managed. The common denominator here is risk –the divergence is that I manage it and do not "gamble" with the risk: Every time I accept a booking in Sterling I buy Euros which is where all my expenses are, and it’s much easier and sensible for me to trade/run controlled risk than to gamble upon next week’s/months exchange rate of which I only have a best guess/faint idea where it will be. I do however have a clearer idea of where I think it “should” be/will be sometime over the next 2-5 years, but there again I could be wrong, either on timing, direction or both. That might be a gamble!
The last thought I will leave you with is that economists have correctly predicted 15 out of the last 3 recessions- so it’s unlikely that a consensus view will produce an accurate FX forecast either. 
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Otherwise you'll just go on seeing the one name:
Otherwise you'll just go on seeing the one name:
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Jivebaby, fascinating. Thank you so much for taking the trouble to inform us all. 
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Poster: A snowHead
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Hurtle, 
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Obviously A snowHead isn't a real person
Obviously A snowHead isn't a real person
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Jivebaby, we still get screwed by currency speculators no matter how you dress it up!
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Well, the person's real but it's just a made up name, see?
Well, the person's real but it's just a made up name, see?
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Samerberg Sue,
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| Jivebaby, we still get screwed by currency speculators no matter how you dress it up! |
Do you mean the 3-5% FX margin/mark up? If so, yes I'd agree that some of the retail margins are way too high.
If however you mean that FX rates are skewed over the long term by a confluence of sources then not.
If you don't heat your property in the Alps at all in winter you might suffer from burst pipes etc or perhaps get lucky and save money if the weather conditions are kind to you. This is the same with the Euro or USD exposures mentioned beforehand. Most people would put insurance policies in place together with a minimum temperature settings to keep things running safely and smoothly.
Managing and covering your financial risks whether mortgages or Forex is exactly the same process, just a different product category which is admittedly poorly understood, but thankfully not by you as your earlier posting indicated –You are clearly well aware of your income/expenditure mixes and critically the risk/rewards that a change (opportunity/threat) in the underlying FX rate would have for you.
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Jivebaby,
In other words you’re saying (albeit eloquently) is that you really don’t have a clue how TO’s operate or, regardless of your professed knowledge regarding FX markets, how the real world operates when it come to spot and forwards.
You should bear in mind the following;
All banks, as corporate entities, are gits.
It is almost impossible to get reasonable forwards at the moment.
Smaller TO’s are only able to get flight/hotel/logistic deals if booked years in advance, and with this time scale forwards just don’t exist.
Most banks are, at the moment, offering only short term forwards – thereby forcing normally profitable (small scale) TO’s to close. Dead simple that one.
I don’t know any TO’s that negotiate with girl behind the counter in the local branch when taking out forwards or spots.
Oh yeah and don’t forget that all banks, as corporate entities, are gits.
However it’s dressed up the FX market is simply a bunch of spivs scrambling to sell something for more than they bought it for. If they screw other people over at the same time, so be it.
Back on topic (of this forum)
We all understand that due to bankers, like pigs at the trough, lunging into various currencies over the past couple of years, in a desperate attempt to maintain their bonuses, the net result has been to increase the cost of our ski holidays. That’s also dead simple.
Fair enough by devaluing the pound by almost 30% we (well call-me-Dave and Nick-never-had-job have anyway) have reduced the debt by a corresponding amount but (as this is a ski forum) the result has not been worth it.
Low pound = higher ski holiday costs
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Anyway, snowHeads is much more fun if you do.
Anyway, snowHeads is much more fun if you do.
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Wayne, most banks offer online spot and fwd prices up to 2 years .. i assume the spread will be related to the amounts turned over
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Wayne,
| Quote: |
| FX market is simply a bunch of spivs scrambling to sell something for more than they bought it for |
Are you saying tour operators make losses deliberately to give us cheap ski holdiays? What world do you live in Wayne?
I pefer to deal with profitable businesses that earn enough to provide me with services such holidays/boiler repairs and car servicing on a reliable and ongoing basis. I really don't want to deal with some monkeyhead who hasn't taken onboard the necessary requirements to run a business properly. If that makes him/them a git, then I'd rather deal with a solvent git than and bankrupt idiot who's stranded me, my family and my holiday up the creek. 
CANV CANVINGTON,
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| most banks offer online spot and fwd prices up to 2 years .. i assume the spread will be related to the amounts turned over |
Asbolutley correct -HiFx, Moneycorp, FairFX and other NBF (non bank financial institutions) offer forward cover for those sensible enough to use. And yes the margin generally will be directly proportional to the amount 
“Forwards” or more correctly named outright forwards are priced based upon the underlying spot rate plus/minus the interest rate differential of the two currencies involved. I've quoted tour operators and an airline out to ten years in the past but that was admittedly exceptional and by the way, they were smart as not only did they cover their risks, they made profits and are still in business.
The low relative value of the pound decreased well before Dave and Nick came into the schoolyard so IMHO it's rather unfair to blame them for something that GB & TB had over 13 painful years to NOT fix ! ...........That said I tend not to blame politicians for the exchange rate, although it's nice to find someone to blame. I look back to British Leyland etc when unionised workforces pushed through uneconomic pay rises which the companies really couldn't afford to pay or to resist –result bankruptcy, with greedy workers pricing themselves out of jobs. Ultimately, even now we all continue to pay for this want-something-for-nothing culture in the form of our manufacturing jobs being exported until such time our fabulous GBP/sterling currency becomes worth so little that manufacturing nations such as India/China/Mexico begin off shoring assembly/manufacture to cheap labour zones such as the UK.
Clearly if we want a profitable country with a credible currency we will have to invent or find something or someone profitable that gives positve returns rather than allowing all the “nice people” to burn our jobs, economy and futures by losing with the best of intentions, all our money and our financial heritage.
Last edited by You'll need to Register first of course. on Wed 17-11-10 23:23; edited 1 time in total
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| Quote: |
You should bear in mind the following;
All banks, as corporate entities, are gits.
It is almost impossible to get reasonable forwards at the moment.
Smaller TO’s are only able to get flight/hotel/logistic deals if booked years in advance, and with this time scale forwards just don’t exist.
Most banks are, at the moment, offering only short term forwards – thereby forcing normally profitable (small scale) TO’s to close. Dead simple that one. |
Apropos my earlier example of the recycling machinery –
Notwithstanding the current financial crisis, is it possible that the banks now view badly run businesses as credit risks, if so this would be a refreshing start and a long overdue precursor for our financial renaissance and potentially denying bad businesses the opportunity to grow without thriving may well prevent a recurrence of the credit crisis we all suffer at the moment. The point is that badly run firms, like rabid dogs simply cannot compete over the longer term and will die. I would argue that it’s safer and more socially responsible to put them down before they bite us in the same way that Crown Currency Exchange did recently. This was a badly run business and deserved to die –unfortunately it took money from thousands of customers at the same time. Potentially your "mate" in the southern hemisphere could fall into this category and from iyour descriptive posting if not for his own sake, he clearly has some underused social and financial responsibility to safeguard the interests of his customers who have had the bad luck book their holiday with his company. Maybe it's classified their own fault for not checking beforehand?
And BTW before you ask -I feel the same way about badly run banks -IMO they should be liquidated quickly rather than to be "rescued" -but depending upon the circimstances. Ergo Lehmans was the right bank and the right warning for shareholders and more importantly depositors in the US: likewise Darling should have allowed LloydsTSB to buy Northern Rock instead of pushing them into the Bank of Scotland/Halifax fiasco.
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| Wayne wrote: |
| ....Low pound = higher ski holiday costs |
and people still in jobs who are therefore able to take ski holidays - albeit at higher cost in ££.
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You'll get to see more forums and be part of the best ski club on the net.
You'll get to see more forums and be part of the best ski club on the net.
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| Jivebaby wrote: |
| Lehmans was the right bank and the right warning for shareholders and more importantly depositors in the US: likewise Darling should have allowed LloydsTSB to buy Northern Rock instead of pushing them into the Bank of Scotland/Halifax fiasco. |
Can I borrow your 20:20 hindsight glasses for a while?
Do they also work looking forwards as I have been reading all the glowing reports from a few years ago on the web by various bankers about what a wonderful example the Irish (Celtic Tiger) economy is and how the everyone should just wait a few years until the Celtic Tiger is the dominant force with the EU, etc. etc.
Yep I really some of those glasses.
Regardless of how much anyone says differently we all know that this stuff was brought about by banks lending cash for mortgages to people who could afford em. Why? Profit – absolutely no other reason. Just that, spivs looking for a way to make a buck.
And before you say well that how the world works – yes it does, but most business don’t enter into contract with people they know can’t afford it pay for their end of the deal, with the certain knowledge that someone else will bale them out when the pack of cards tumbles.
Banks (the people who work in banks) caused these problems and everyone knows this – except, it seems, the bankers themselves.
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Or.. the government's inability to regulate a market that they continued to deregulate.
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FAQ
