Hopes of a Fed hike in June diminish as the US is hit with poor economic data. This week's retail figures may revive some hope. In just 5 days, swings of 2.32% have been highlighted for the GBPUSD pair which would have been a difference of $6,695.75 on a £200,000 purchase.

US economy adds fewest new jobs in 7 months

Much to the disappointment of the Fed Reserve, USD bulls and many investors in general, the likelihood of a rebound to the US economy and therefore, a first interest rate hike since December is now looking highly unlikely. As are the planned two rate hikes from the Fed this year in my opinion.

On Friday, Non-Farm Payroll Figures (A statistic researched, recorded and reported by the U.S. Bureau of Labour Statistics intended to represent the total number of paid U.S. workers of any business, excluding agricultural employees) showed that the US labour market added the fewest amount of new monthly jobs in 7 months. This coupled with news that April saw the largest amount of layoffs since the harsh winter of 2014 doesnt bode well for the US economy moving forward.

Last week the Dollar index, which measures the value of the US dollar against a basket of other major currencies, hit a 15-month low. I believe this is a reflection of how disappointed investors are after the number of intended interest rate hikes has fallen from four down to two, and now even those two hikes are looking unlikely in the eyes of many market analysts and brokers, including one our own traders in Dayle Littlejohn who has previously discussed his own lack of optimism during one of our market reports.

Should the UK decide to remain within the Eurozone Im expecting cable (GBPUSD) to breach the 1.50 mark sometime this year. It might be advisable for anyone holding Dollars, whos waiting for the right time to sell to get in contact with their assigned broker here at currencies.co.uk, in order to discuss a strategy moving forward as the next two months have the potential for further Sterling strength depending on the EU referendum outcome next month on the 23rd.

US data releases this week

With the probability of the Fed hiking interest rates at its June meeting falling as low as 4% (according to the CME Groups Fedwatch tool), US Dollar bulls will hope that this week provides some positivity for the greenback in the form of economic releases.

The main event of the week is expected to be the release of April Retail Sales Figures by the department of commerce on Friday. Forecasts appear positive so far with the market expecting a 0.9% increase from the previous month. This would be the strongest monthly gain since May 2015 and would be welcomed by a struggling USD.

The US will be releasing Inflation data this week as well. On Thursday the import and export price index will be released, and then on Friday the Producer Price Gauge will be released and both are for April.

I hope you found my US market report this morning useful, if you have any questions regarding the report or would like to know how future economic releases could impact your USD buying requirements, speak to one of our brokers today on 01494 725 353 or email me at jxw@currencies.co.uk.


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