President Trump has a new raft of international issues to contend with, which is likely to affect USD exchange rates in the medium term. This paired with the ongoing trade tariff situation arising between the US and China means we could see a volatile period for USD. This forecast looks at how the Dollar could be impacted by these factors, the table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points yesterday.

Currency Pair% ChangeDifference on £200,000
GBPUSD0.6%$1760 USD
US economic data this week

Will the Dollar Strengthen?

The US Dollar is likely to be set for a very volatile period in these coming weeks and months with so many issues for President Trump to contend with. The sudden escalation of events in Syria after a gas attack on civilians in Syria, the missile strike on a Syrian air base as well as developments from Russia following the Salisbury poisoning will all inevitably contribute to the volatility for dollar exchange rates. The US has imposed sanctions on Russian businesses as well as expelling 60 Russian diplomats and there are fears that tensions could escalate further. In times of global uncertainty, the US Dollar usually retains its safe haven status and the dollar could be a big beneficiary this year on the back of global and political developments.

Overnight Trump has now pledged a “forceful” US response to the alleged chemical attack in Syria and that would be decided shortly. Expect volatility in the financial and currency markets as developments unfold.

Later today will see Facebook’s Mark Zuckerberg answering questions on Capitol Hill with regards to data sharing and also Russian election interference which could create some new problems for the US President. This is on top of the investigation into Trump’s affair with porn star Stormy Daniels which saw his lawyers offices raided last night creating more uncertainty for Trump and the Dollar.

Trade Tariffs Raise Fears for the Dollar

With tit for tat trade tariffs being imposed by the US and China there is a growing risk of a full on trade war between the two nations. Many commentators had felt the imposed tariffs had reached the maximum although that all changed after a tweet yesterday from Donald Trump: “When a car is sent to the United States from China, there is a tariff to be paid of 2 ½%. When a car is sent to China from the US, there is a tariff to be paid of 25%. Does that sound like free of fair trade. No, it sounds like STUPID TRADE – going on for years.”

Chinese President Xi Jinping has made a speech this morning which offered a conciliatory tone. He went one step further saying China would lower import tariffs on vehicles and encourage imports. Until now the rhetoric so far from China is that the only option was to hit back so America will “remember the pain”. Expect more volatility for the Dollar as the battle for trade intensifies.

Producer Price Index inflation numbers this afternoon could create some movements for the dollar ahead of tomorrow’s Consumer Price Index numbers. A high level of inflation should be seen as positive for the Dollar.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.