The US dollar looks set for more volatility after US President Donald Trump escalated the trade war between the US and China by imposing new tariffs on Chinese imports worth an additional $200 billion. The USD report below discusses the potential ramifications of the increased trade tarfiffs on the safe haven currency; the table displays the range of cable exchange rates during the high and low points of trading yesterday.
|Currency Pair||% Change||Difference on £200,000|
Donald Trump has warned that if China retaliates by imposing its own tariffs then the US will escalate the row and enter what the President has called Phase Three. Phase Three would see a further $270 billion worth of tariffs in this outcome which would effectively cover all Chinese goods coming into the US. These kind of very substantial numbers are considerably more than the $50 billion that was announced in two tranches over the summer and so the real impact globally remains to be seen. The new tariffs will take effect on September 24th starting at 10% before rising to 25% January 1st 2019.
China has now responded with $60 billion worth of tariffs so how the Trump administration responds again will be of huge interest.
The US Federal Reserve are widely expected to raise interest rates at the October meeting whilst there is now a growing expectation that the Fed will need to hike at the December meeting. A rate increase in December this year will take the total to four for 2018. There are a number of Fed officials who are openly leaning towards higher interest rates following the substantial tax cuts and spending programmes introduced under US President Donald Trump. The markets are also preparing for a possible two further hikes in 2019, the pace of which should prove beneficial for dollar exchange rates.
US Housing data released yesterday arrived better than expected providing some support to the dollar.
There have been concerns that the US housing market could be about to falter and it is normally the housing market and construction sector which suffers first ahead of a downturn. More US housing data will be released this afternoon in the form of mortgage applications, building permits and housing starts. The releases could help direct the Fed as any signs that interest rate increases are starting to bite could slow down the pace of any future hikes.
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.
James and his colleagues are always courteous and helpful. I have also never been able to find rates of exchange that are more competitive. I am particularly impressed with the service, as I am not in the habit of transferring massive amounts!
As always a really quick and easy transaction. James is very knowledgeable and helpful. Great rates.
Always helpful and they always give rates at the very top of the range. Quick transfers to our french bank account – highly recommended. Well done James Lovick 😉