Interest rate hike on hold

Federal reserve Chairlady Janet Yellen yesterday rocked the GBP/USD rate when she suggested the FOMC (Federal Open Market Committee) may look to raise interest rates soon. In my opinion this wording implies that the previous likely rate hike in 2016 is no longer coming. There was always an ongoing debate as to what the Federal Reserve may do if Trump was elected and it appears letting it play out is the solution.

The US economy in the last few months was starting to look an economically stronger place however with Trump soon to be steering the ship a lot could change.

The change from a Democratic government to an industry focused leader with a Republican majority in congress presents the opportunity for Trump to make significant changes. The already cautious Fed are certainly not in the frame of mind to make knee jerk reactions and the wait for an interest rate hike could go on.

Big Day for Data

The US economy indicated positive signs yesterday as the Consumer Price Index was up for both the month on month and year on year figures. This was couples with an increase in building permits and a drop in the number of initial jobless claims.

However, the Philadelphia Fed Manufacturing Survey which considers businesses attitude from production and orders was below the expected result. Whilst it may be early to claim the Trump factor is taking place, this sort of release can often provide an early indication into the industrial landscape.

There is so much volatility currently that if you were completing a $200,000 transfer since the start of this week you would see a difference of £2135 between the high and the low. Therefore, it is key to make sure your broker knows about your requirements to be in the best position to help.

The markets may have priced in an interest rate hike in December and if the FED deviate from this, the US Dollar could lose momentum presenting opportunities for US Dollar buyers. That being said, with Theresa May set to invoke Article 50 early next week, there are no guarantees during these very volatile market conditions. It pays to be in touch with a knowledgeable broker who understands the markets, call our trading floor or email brf@currencies.co.uk if youd like to learn more.

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