In a further development in the US-China trade war, the US have upheld the threat of trade tariffs against China if the issue of alleged intellectual property theft against the US is addressed. The US Dollar report below looks at how this could affect the safe haven currency in the short term. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
It seemed like the US and China has agreed a consensus which put an end to the trade war between the superpowers.
On Tuesday, the US said that it holds the threat of imposing tariffs of $50 Billion of imports from China unless Beijing addresses the issue of theft of American intellectual property. Both sides will be aware that a trade war will not benefit either in the longer term, but this is the latest episode in a season of escalation and appeasement.
China has questioned the USA’s credibility and has evidently lost trust in the Trump administration. This is not the first time the USA’s reputation has been questioned recently…such as respectively breaking and renegotiating the Iran and NAFTA agreements.
This could affect the Dollar negatively as the economy would be weaker, but the Dollar could still strengthen. In times of uncertainty, investors will buy a safe-haven currency – none more so than the Dollar.
Despite a holiday shortened trading week, the US economic calendar has been busy this week, with updates on growth, jobs, inflation, manufacturing and consumer spending. Yesterday, annualized GDP figures for Q1 came in at 2.2% from 2.3%. In addition, a negative Personal Consumption Expenditure figure of 2.3% down from 2.5% shows the amount of money consumers are spending on durable goods, consumer products and services has decreased from last quarter. These are important measures of inflation and whilst they should not affect the Dollar too much in the long term, it is worth seeing if economic data continues to disappoint - this will influence whether the Fed raises interest rates three or four times this year.
At 13:30 on Friday the US will release their latest Non-Farm payroll numbers and average earnings figures which are respectively expected to show 21k more jobs than last month and a 0.1% improvement respectively. The unemployment rate is set to remain at 3.9%.
These releases are very important for the US economy and are worth keeping an eye on as currencies will fluctuate. If the expectations are met I expect the Dollar to strengthen – not just regaining its losses against the Pound and Euro from earlier this week but also – as the year goes on. If Brexit talks don’t go to plan, we could see GBPUSD drop further towards 1.30.
If you have an upcoming currency requirement, timing your transfer around US data releases could save you thousands. Our expert team would love to help.
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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