Daniel Johnson
Senior Executive Dealer
Increased optimism on FED rate hikes
Investor confidence in further interest rate hikes increased with San Francisco Fed President claiming there are grounds for multiple rate hikes in 2018.
Request a quoteGetting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements for Wednesday rates when buying £200,000:
| Currency Pair | % Change | Difference on £200,000 | |
|---|---|---|---|
 GBP |  USD | 0.59% | $1600 |
Investor confidence boosted following Fed comments
Yesterday saw investors become more optimistic on the chances of multiple rate hikes from the Federal Reserve in 2018. Recent comments from Federal Reserve policy makers suggest that the FED will continue with it’s plans to tighten monetary policy at a gradual rate. The Dollar had weakened earlier in the week as pessimism filtered through to the markets in regard to future US rate hikes due to inflation remaining stubbornly low.
Inflation concerns led Federal Open Market Committee (FOMC) member and Atlanta Fed President, Raphael Bostic to suggest there may only be two rate hikes in 2018.
If you are buying US Dollars with Sterling I would be tempted to move at current levels considering the current outlook.
John Williams, the San Francisco Fed President was much more hawkish and has stated that solid economic growth in the US last year and the possibility of a further boost from Republican tax reforms would support at least three hikes.
The next Fed meeting is due at the end of the month with investors hoping it will give a further insight into the Fed’s stance on interest rates.
US Retail Sales and CPI data could influence the Dollar
US retail sales measures the total receipts of retail stores. It gives a clear indication of consumer spending and as this is key to the health of an economy can cause volatility. There is expected to be a 0.4% decline, but considering the positivity surrounding US economy at present I am going to go against the grain, I think the drop will not be so severe which could strengthen the greenback.
By measuring the changing price of a hypothetical basket of goods, the Consumer Price Index (CPI) provides data on the price movements in an economy.
CPI could influence USD, as it is used as a key indicator for inflation which affects rates of exchange. There is expected to be little movement from the previous month, but if the figures go against expectations of a slight decline we could see swings in Dollar value.
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.
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