Following worse than expected retail sales figures which came in at -0.3%, the potential boost for USD from positive CPI data at 0.5% was eradicated. The below table shows the difference in US Dollars you could have received when buying £200,000.00 during the high and low trading points during Thursday.
|Currency Pair||% Change||Difference on £200,000|
One of the key factors in US Dollar levels is the Interest Rate forecast, over the last few months predictions have been between 2-3 rate hikes over 2018. The more potential rate hikes the stronger the US Dollar becomes. If the situation changes and it looks as though there are likely to be less hikes the green back can be expected to fall in value.
US Consumer Price Index (CPI) data was recently released and has come in far better than expectations and arrived at 0.5%, this usually would prompt investors to move to the Dollar in hope of high returns if the predicted hike goes through.
There was cause for concern however. There was a significant fall in US Retail Sales figures which came in well below expectations. There was expected to be a fall in January from 0.4% to 0.2%. The figure came in at – 0.3% which should throw into doubt a rate hike by the Federal Reserve short term.
It will be interesting to see how new Fed Chair, Jerome Powell will react to this data. Keep a close eye on speeches from Federal Reserve representatives as if they give an inkling to the stance on US rate hikes it could influence US Dollar value.
Housing starts data is released today and it lets us know how many new buildings or single-family homes have been constructed. It can be known to move markets due the health of the housing market being key to the health of the US economy.
The Building Permits release following Housing Starts gives an idea of on new construction. It implies the movement of corporate investments and can be known to cause volatility.
Wednesday next week brings Services and Manufacturing Purchase Manger Index (PMI) figures. Both make up a substantial amount of US GDP so can influence the market.
The Federal Open Market Committee (FOMC) minutes also takes place on Wednesday and this could be the most important event for the US Dollar of the week. With so much uncertainty surrounding the US Interest Rate forecast this could be used for the FOMC to provide some much needed clarity on the situation to investors.
If there is a bullish tone the Dollar could gain strength.
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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