Following on from last Fridays conference in Jackson Hole, many are now expecting the FED to increase interest rates in September or December.

US job creation slows

The US private sector created 177,00 job is August, 17,000 less than month before but 2,000 more than economists had predicted according to a report released by Automatic Data Processing or ADP. This ADP report comes just before Friday’s eagerly awaited Non-Farm Payroll figures. Currently, analysts have stated the Fed are looking for New-farm payrolls to exceed 250,000 or more this Friday, then a September rate hike becomes a real possibility. It is more likely that this figure will be below 200,000 and therefore will push the Fed into waiting until December’s meeting, a year on from when they first raised interest rates.

In my personal opinion, I don’t believe that the Fed are likely to raise interest rates this year. I believe that the economic turmoil across the pond both in the UK and the EU from the Brexit is weighing on the Fed’s decision to raise rates. Furthermore, although the Fed’s decision to raise interest rates in purely data dependent, the speculation surrounding who will be the next US president is clearly starting to creep into people’s minds.

The Greenback could go from strength to strength

As mentioned in my previous section, Friday’s Non-farm payroll figures which indicates how many new jobs were created during the previous month will be released alongside the unemployment rate. If these figures show any further strength in the US labour market then we could see Cable drop below 1.30 once more.

Clients looking to buy Dollars should be watching the market like a hawk. Next week both the European Central Bank and US Fed are due to hold an interest rate decision. As a safe haven currency, and the world’s most commonly traded currency pair, If the ECB look set to cut interest rates and deploy further stimulus, I would expect investors to move their funds into the dollar to reap higher interest rates and higher returns. This would make a dollar purchase more expensive, so get in contact with your broker to devise a stagey to protect you.

Are you looking to buy or sell US Dollars? The upcoming FED interest rate decision and US elections could cause quite a stir for the US Dollar. Get in touch with our brokers today on 01494 725 353 to discuss your requirements.

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