Trumps actions in Syria have sparked anger amongst the Kremlin which many now fear could be the start of another war. The US Dollar and gold stocks have risen as investors flock to safer currencies and commodities.
Trump’s rhetoric and actions in Syria have pointed to a dangerous game of cat and mouse with the Russians as the whole world keenly watches to see what happens next. Whilst no one really believes a ‘World War 3’ is imminent there are clearly some aggravated tensions.
As US battleships move closer to the Korean peninsula, North Korea has pointed out there could be ‘catastrophic consequences’ from any action. All of this has taken the edge of the recent weakness of the US Dollar which is now at slightly improved levels versus the Pound and Euro. Any significant deterioration or cause for alarm from military actions could easily see the US Dollar find further favour. As a safe haven currency the US Dollar benefits in times of global uncertainty such as war or great economic concern. It is no coincidence that with these concerns in the background other safe havens like Gold have risen in value and Asian stock markets opened this morning lower. There is currently a split in the G7 approach to handling the crisis with some favouring further Russian sanctions whilst others want more dialogue first. Keep in touch with your account for any key news that could impact your exchange rate as this is a vital issue that could influence many currency pairs.
Key economic news for the rest of the week in the US is Inflation data on Thursday and Retail Sales Friday. After Friday’s mixed jobs numbers which have largely been shrugged off, investors will be keen to see if the latest data will confirm or not the likelihood of further rate hikes this year. The US Dollar is at multi year highs against most currencies as the US Federal Reserve raise interest rates. Despite many calling the end of the recent ‘Trump trade’ which saw a boom in the US Dollar and stock markets, the US Dollar has lots of reasons to strengthen and may well rise further owing to the economic news as well as the threat of global conflict.
Against a much stronger Pound which has found buoyancy after the triggering of Article 50 rates for US Dollar buyers are looking much more impressive, and I do feel these US Dollar buyers should be taking real stock of the current levels on offer. 200,000 USD bought at the January lows would be £5300 more expensive than today. With the possibility of the US Dollar rising as global tensions escalate such gains should not be easily dismissed. Keep in touch with our account manager for the latest news on these important issues by calling 01494 725 353.
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