Value of the Euro

Aug 21st, 2003, 04:49 PM
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Value of the Euro

In case you had not noticed, the value of the dollar against the euro has changed in the last week.
The closing rate today was $1.093 for 1 €. The rate had been as much as $1.185 against us. That is about a 7.5% swing in "our" favor. (Assuming a US starting point; I know we have an international audience.)

Has anyone seen a study that measures the correlation of the Swiss franc on the euro?
On casual glance, it seems that the Swiss franc tracks the euro very closely, but I was wondering it any had seen the relationsip put to statistics?

Are we talking a corrlation coefficient of something close to .9 or what??

Just curious. Its no big deal except my trip next week is getting a little cheaper!
bob_brown is offline  
Aug 21st, 2003, 05:08 PM
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Yes, hooray for us! I had ordered some Euros at the bank on Monday, and picked them up today. The teller actually gave me back some change, as the price she had quoted me actually went down!! Sure hope the Swiss franc follows, as we're going there also. We leave 2 weeks from tonight, sure hope the trend continues.
Hagan is offline  
Aug 21st, 2003, 05:10 PM
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Good news Bob, Let's hope that trend keeps it up. When we were in France a year ago April it was 1.09 euros to 1 dollar. Helped me justify alot more spending!
swalter518 is offline  
Aug 21st, 2003, 06:53 PM
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I do remember hearing on the radio a day or two ago that the value of the dollar vs euro was the highest now as it's been in the last 3 months.
Christina is offline  
Aug 21st, 2003, 07:10 PM
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I am going to Italy at the end of October - since the euro is so low now, should I exchange some american dollar's for euros and just hang on to them? I am new at this Europe thing - thanks,
sophieD is offline  
Aug 21st, 2003, 07:48 PM
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sophie, if someone had a firm fix on that type of thing, they could make some serious money in currency trading. But to answer your question, you will almost always save in exchange costs by obtaining your Euros in Europe with an ATM instead of doing it on this side of the pond. That alone would help you to cover a bit of unfavorable fluctuation because the spreads and fees spreads involved in small foreign currency trades often look pretty ugly when you price them out as a percentage of the transaction. I would hold off for that reason alone, but perhaps more importantly because nobody can say what the exchange rate might look like in October anyway. The trend may end up being your friend.
Flyboy is offline  
Aug 21st, 2003, 07:52 PM
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Glad I waited awhile to pay the gardner! Last time I paid a lot of French bills I was working on a 1.28 conversion rate! Awful! I hope to get a few more roses out of this latest check.
StCirq is offline  
Aug 21st, 2003, 09:07 PM
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I agree with Flyboy. If we knew which way currency prices were going, as some insiders seem able to do because they get advanced warning, we could get rich. Money is traded in million dollar chunks (or more) like most of buy socks and shirts. The money traders sweat it out over .001 of a dollar (one tenth of a penny) because when you are slinging 5 million dollar coupons around, a fluctuation of .002 can either make $10,000 or loose $10,000 before you can signal a transaction.

Right now I would not buy and hold euro notes. The threat of a recession in euro land is still alive and active while the US economy shows signs of recovery. The stock market is recovering nicely right now, although not spectacularly. If the economy heats up a little, interest rates will rise, and if corporate profits start to look robust again, foreign investment will be coming over here. That kind of pressure will drive the euro lower relative to the dollar.

I don't think the price of one euro will dip to 87 US cents any time soon.
And even if 7.5% is not a major sum of money relative to our travel budgets, it is still about $300 on a $4,000 trip. I don't know about you, but I travel on a thin edge of keeping out of debt. So if I can spend less on hotels and meals, it lets me be freer with incidentals.

On the currency correlation question, I was curious because I have wondered how long the Swiss could hold out. Forever I think, given the fact that the Swiss banks deal in euro accounts. The main idea is that the banks are multi currencied as the people are multilingual.

The interesting aspects of currency trading is that some currencies move inversely to others and are a favorite hedge tool for some of the big money swappers.
The Swiss franc seems to track the euro closely, so there is slight chance that it will drop with respect to the dollar just like euro. It was down with respect to the dollar in the same percentage as the euro -- using this weeks figures as basis.

Last year when I was in Paris I think the rate was near 1:1.
bob_brown is offline  
Aug 21st, 2003, 09:18 PM
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Last Oct. when we visited Europe it was 1:1. Let's hope it can be that way again soon-at least. Every little bit helps...
francophile03 is offline  
Aug 21st, 2003, 09:21 PM
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Bob check out a lot of traders go here and there is a chat forum to post questions..I went there a long time ago when I had questions concerning the Brazilian Real. Hope this helps.
Katherine is offline  
Aug 22nd, 2003, 06:34 AM
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The currency web site referenced above is interesting.
The forecast is for the dollar to weaken against the euro. I found that amusing because the same site was also describing US recovery and the strengthening of the dollar. The dollar right now is under 1.09 for the first time in several seeks. The forecast was for it to be $1.12 for 1 € in September and $1.20 in a year.

If that is the case, then go buy a pile of euros while they are cheaper than they will be. The problem is that for many of us to buy euro notes in quantity we pay a hefty commission that negates any trade rate advantages.

Unless you are prepared to swap $100,000 chunks, I don't think you are going to make a profit.

Which way is the dollar going? Who knows. The Republicans want it weaker!

I decided I will keep out of that market!! I will happily let the energetic people in Japan, Switzerland, London and Zürich sling the million dollar certficates about like they were cups of water.

bob_brown is offline  
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