This US Dollar report will address the factors that could have an effect on USD exchange rates over the coming weeks. The table below looks at the difference between the rate you would have achieved when purchasing £200,000.00 at the low and high levels during the past month.
|Currency Pair||% Change||Difference on £200,000|
Dollar holders were dealt some very sorry hands to close the week as unimpressive US economic releases combined with improved political outlook in Europe and the UK to drive the Greenback down against the majority of its currency counterparts, hitting 3 month lows against the Euro and perhaps most notably allowing the Pound to go on a 1.5% drive to hit 1.37 for the first time since the referendum vote.
It naturally leaves those looking to buy Dollars with Pounds to consider their options, with some potentially eyeing up a move at 1.40 but given these are potentially the best levels we have seen in over 18 months and we have so many reasons for the markets to place their bets with greenback the longer we go into 2018, it might be wiser to consider capitalising the Dollar's current and most likely ephemeral weakness.
I found it interesting how the markets didn't really respond to the impressive inflation and employment data released at the end of last week. US core inflation data released showed a gain of 0.3%, its strongest drive in almost a year, Whilst 148,000 jobs created in December, with average earnings on the rise too.
Normally when these kinds of releases surface, investors would begin to pile in to the Dollar as it discounts any concerns the Fed might have about aggressively hiking interest rates throughout 2018. However it seems the markets haven't really bought into it as yet, maybe feeling the policy makers at the US Central bank have their hands tied at present, whilst everyone waits for the change of Chair scheduled for February. My view is this could potentially cap Dollar exchange rates until the end of the month. I would certainly consider buying Dollars now, before the change is made.
If you are indeed in the market for Dollars at present there isn't a wealth of economic data out from US to start the week but there is potential for a spike in rates if EU inflation comes out strongly, leaving investors to switch their Dollars into Euros thus weakening the Greenback.
There is housing data and further employment data due from the states on Friday. All have been performing well of late and there seems no reason for them to disappoint this time too. I expect the Dollar to be a more expensive option by the end of the week.
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