The US stock markets have suffered as a result of the trade tariffs put in place by both the US and China, and the USD has had a volatile period as a result. We could see further change as the tariffs promised could come into play this week. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
After the latest US Jobs data came in on Friday at 103,000 nearly 100,000 below the expectation for March. Jerome Powell who is the new Federal Reserve Chairman delivered a market weakening message that they need more time before making any further changes to US Economic Policy.
Powell who took over from Janet Yellen at the start of the year appears to have taken a leaf out of her book and take the cautious stance wary of exciting the markets. He raised concerns with regards to the inflation level in the US and no doubt is keen to wait to find out the impact Donald Trump could have over the next few months.
There is still a market expectation of an interest rate hike in June, however the speech on Friday could be interpreted as Powell allowing some wiggle room to back track on the claim of a definite two further rate hikes this year. Following the speech from the Chairman the US Dollar having made gains on Friday gave back the ground with the GBP/USD moving back above 1.40 following a brief spell in the 1.39’s.
President Trump’s trade war this week could move into a decisive period as the threats and retaliation from both sides into the introduction of $100bn tariffs could come into fruition.
The stock markets in the US have suffered this week, whilst the US Dollar has had a fairly volatile period of late.
The Republican party are thought to be growing tired of Trump after the last year was spent strengthening the job market and introducing a reformed tax bill. However now Trump has gone down the trade tariff route and increases to the cost of goods to American consumers could see any benefit from the tax cuts written off.
In a radio interview yet to be released the President is thought to have said “there could be a little pain over the dispute with China”. That could be considered as a major understatement, especially as China have no intention of backing down and keep matching every suggested sanction from Trump.
The main data for the US this week comes on Wednesday as the latest inflation data is released in the form of the Consumer Price Index. After Powell’s speech on Friday this will be greatly anticipated, the release is expected to be 2.0% which is an increase of 0.2% from the month before, however anything below the expected and the US Dollar could weaken as doubts regarding future rate hikes may set in.
Contacting your broker could make sure you trade at the right time in what could be a volatile week.
For more information on how future data releases could affect your currency requirement, call our team of currency brokers on 01494 725 353.
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