Why is the USD so expensive?

Buying the USD remains incredibly expensive with the Pound and I generally expect this new range to remain for some time. Traders are still trying to second guess when the US will start to raise interest rates again, the current forecast sits at a 14% change in September and a 40% change in December - These changing forecasts continue to impact demand for the US Dollar and as a result its value will continue to rise.

US Housing market expected to show improvements

Later this afternoon the US releases both Housing Figures and Mortgage Figures. Both are expected to show improvements with mortgage applications expected to have climbed along with the average house price.

It is expected that this will make the USD slightly more expensive as a result so if you are buying property in Florida expect your costs to climb later this afternoon.

Jackson Hole meeting this week

This week eyes are on the Jackson Hole meeting when the head of the FED – Janet Yellen will make a statement. It is highly likely that her commentary will have an immediate impact on the USD’s value. If her comments suggest that it is more likely that an interest rate will come sooner than expected, the USD will become more expensive to buy. If she however pushes back any forecasts of an interest rate hike, expect the USD to get cheaper to buy.

Personally I expect a very ‘fluffy’ statement from her as she continues to remain none-committal before the elections are concluded. This would not traditionally be the case as the FED is expected to be independent of government however in this election with the ‘wild-card’ of trump her hands are tide. Simply put it is widely expected that if Trump were to become ‘leader of the free world’, other central banks would act.

Presidential election impact on interest rate change

It would seem that the US election race is the big catalyst for change this year. With the balance between Trump and Clinton going to have a rather large impact on the global economy. It seems fair to assume that the Federal Reserve will probably hold out from making any change to their interest rate until the new President has been announced as they could easily be very different.

With the US elections fast approaching, the US Dollar will likely hit a period of volatility which could impact your US Dollar requirement. Call us today on 01494 725 353 if you plan on buying or selling US Dollars in the near future.

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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.