With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table shows the difference in USD you would have achieved when buying £200,000 at the high and low points of the past 3 months.
|Currency Pair||% Change||Difference on £200,000|
Yesterday proved to be a very volatile for the GBP/USD rates as it jumped between 1.29 and 1.30 over the course of day as the markets digested the exchange of Nuclear threats between the US and North Korea. As is custom when international conflict arises, investors drove their funds away from riskier currencies and commodities and placed it with haven currencies like the Greenback, the Swiss Franc and the Japanese Yen.
Although it surrendered its gains over the Pound yesterday afternoon, the Dollar did close the day 0.3% up against its major currency counterparts which has helped halt a negative run since the start of the month.
As this story continues to develop, I wouldn’t be surprised if this global unrest provides a short-term benchmark for the Dollar, making the likelihood of the pound breaking back through the 1.32 mark far less probable.
Although the demand for the dollar is currently on the rise as a result of geopolitical uncertainty, I still believe that the strength the greenback can take from it all is still very much handicapped by the Fed’s non-committal stance with regards to raising interest rates. This was further compounded yesterday as Chicago Federal Reserve President Charles Evans made it clear he would not condone raising interest rates given 2017 disappointing inflation releases. Evans suggested that the Federal Open Market Committee (FOMC) was surprised with the drop in levels and that despite the economic growth in the states, the Fed needs to stay true to it’s objective.
As a result, I expect Friday afternoon’s Consumer Price Index release to be closely watched by the markets. Should they come in lower than expected once more, there could well be a spike in the market for Dollar buyers. It may pay to contact your account manager before the release to make sure you are in a position to capitalise on any potential gains.
Thank you for reading today’s US Dollar report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than happy to assist you with any of your currency requirements. Feel free to e-mail me here.
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