The US Dollar ended the week on a high following strong unemployment figures, will the FED look again at raising interest rates at their next meeting?

Air strikes strengthen the US Dollar

In the early hours of Friday morning President Donald Trump ordered US air strikes on a target in Syria. Reports are suggesting the reason for the strike was to prevent further chemical attacks from President Assad. Global leaders from Australia, Germany, France and the UK supported Trumps move and blamed the Syrian President.

In regards to currency the US Dollar strengthened off the back of the news as investors flocked to safe haven currencies. If unexpected future attacks take place I wouldn’t be surprised to see sudden US Dollar strength once more.

Those looking to buy Dollars with Pounds to consider their options

A mixed bag for US economic data

On the first Friday of every month the US release Non-farm payrolls and Unemployment rate numbers at 1.30pm. Both releases have the potential to have a major impact on US exchange rates and last week’s number did not disappoint. Non-farm Payroll numbers which is the amount of jobs created in all non- agricultural businesses was released at 82k less than expected and the initial reaction was for Sterling to claw back some losses from the morning session. However, the comeback was short lived as Unemployment fell to 4.5% from 4.7% which outweighed the poor payroll numbers and the US Dollar went from strength to strength against Sterling and central levels finished in the 1.23s. Now that Unemployment has fallen this could add additional pressure on the US to continue raising interest rates, good news for any clients holding onto US Dollars.

When to buy US Dollars with Sterling

For the last 6 months GBP/USD exchange rates have fluctuated between 1.20 and 1.27 and I wouldn’t be surprised to see this trend continue in the months to come. Economic data in the US should continue to impress which will keep the Federal Reserve interested in raising interest rates. Couple this with certainty now for the UK (for the time being), I expect rates to continue to remain range bound between 1.20 and 1.27. Therefore if you are buying US Dollars within the upcoming months, my strategy would be to purchase anytime central levels rise above 1.25.

You can always set a rate alert or talk with one of our team members about the different contract options available to you in order to mitigate risk during periods of market volatility. Call us on 01494 725 353 to learn more.


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