This report will examine the factors that could affect US Dollar exchange rates in the short term in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low yesterday.

Currency Pair% ChangeDifference on £200,000
GBPUSD4.30%$11,150
Federal Reserve’s Bostic states three hikes in 2018 could be too much

Earlier this week we had the latest information from the US Federal Reserve (FED) with the release of the minutes from their recent meeting. This came out as expected with policymakers expressing concerns about lagging inflation, but many see an interest rate hike in the US at their December meeting as almost a certainty.

This has long been priced into the market so had little impact on the value of GBPUSD rates. The market currently expects US rates to be at 1.5% by the end of this year and 2.0% by the end of 2018. At the moment I expect little upside for US to be caused by interest rate news however lots of downside if they decided against this hike in December - something to be aware of it you are holding out for further gains later in the year based on this news.

US Labour raise concerns

The US Labour market has shown significant strength through 2017, however seems to dropping recently. This fall has widely been put down to the recent hurricanes impacting the East coast of the US. US Non-Farm Payrolls last week saw a big fall as a direct result of the increased amount of people applying for job seeker assistance. The latest update came yesterday when US Jobless claims were released, this showed another fall with the same reason widely assumed. What needs to be keenly watched is how long this contraction continues and whether in the months ahead we see the labour market start to recover. If these adverse effects continue to have an impact longer term I fully expect it to dent the pace of any future US interest rate hikes next year.

US taper, why is it important?

The world is now 8 years into the recovery from the crash in 2008, and most central banks are talking about raising interest rates and starting to taper their QE programs. This is the process of slowing down the level of stimulus that the central banks put into their economics, America is leading the way and is set to start this month. The overall process however is likely to be prolonged, taking years and years so is a topic for clients with long term exposure to keep well aware of. Any hint towards more tapering will strengthen the currency in question, however any delays will have a negative impact weakening the value of the currency and making it cheaper to buy. The next update on this topic is expected from the US in December, when they potentially raise interest rates.

USD expected to get more expensive today

This afternoon we have a host of data released on the strength of the economy in the US. There are several speeches from FED members along with Consumer Price Index (CPI) and the Baker Hughes Oil rig count. CPI is expected to show another improvement and most expect FED members to continue to call for a hike in rates, as a result most expect the USD to get more valuable throughout today. If you are a USD buyer you may wish to move sooner rather than later to avoid further costs.

For more information on how future data releases could affect your US Dollar requirement, call our trading floor on 01494 725 353 or email me here.

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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.