The US dollar had a tough end to the trading week as September's Non Farm Payroll numbers fell short of expectation at 134k, rather than the expected 185k. Wage growth numbers slowed (2.9% to 2.8%). The only saving grace was that the Unemployment rate continued to decline and now sits at an incredible 50 year low at 3.6%. All three releases have a major impact on interest rate decisions. The Federal Reserve at present are still forecasting a hike in December, which should provide support for the US dollar. However, in recent weeks the commentary has not been as positive as earlier in the year as economists fear that the trade war with China will stop the FED from raising interest rates throughout 2019. However, Chairman of the Fed Jerome Powell remains upbeat and believes it’s likely the FED will raise three times through 2019.
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It’s an action packed week for US economic data releases. Four members of the Federal Reserve will give speeches on Tuesday and Wednesday. Any further hints that the FED will raise interest rates in December should provide a boost for the US dollar. On Thursday, Consumer Price Index numbers are due to be released, also known as inflation. CPI is set to rise to 2.3% from 2.2%, which is great news for the US as this would support further interest rate hikes. Another 2 members of the FED are also due to give speeches on Friday.
In regards to GBPUSD exchange rates, it looks like UK GDP is going to fall, so a slight rise in US inflation could see GBPUSD decline throughout the week.
Nevertheless, I expect Brexit developments to outweigh the economic data releases, therefore clients trading GBPUSD should keep a close eye on the Brexit developments as they unfold.
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