Cable this morning moved into the 1.47’s, reaching its highest point since the first week of January only 9 weeks after it was at its lowest point for 7 years.
The Dollar has struggled as of late as the unraveling of the 4 priced in rate hikes continues after the Fed let another meeting go by with no change. Yesterday there was data released for Manufacturing PMI which came in worse than predicted for April along with construction spending which was down 0.7% from the previous month.
In some good news the Institute of Supply Management Prices Paid release should a huge increase in future orders and bookings which could prove there is maybe some confidence in the economy.
The US Election primaries are moving into their final stages as May hosts 5 Primaries for each party with only a few dates left in June. The reality is slowly setting in that Donald Trump appears to have completed the impossible and looks likely to be on the ticket for the Republicans, Hilary Clinton is pretty much a full gone conclusion for the Democrats. Not much has been said for the policies of these two candidates however there are similarities to the UK’s Conservative and Labour parties, Trump is looking to reduce top tax for individuals and corporations. Clinton on the other hand is going to increase tax and improve the social state.
Clinton will also look to end fracking, which has become a major energy source in the US, suggesting climate change is the “most consequential challenge we face”. Trump alternatively is looking to protect the coal industry from the Environmental Protection Agency; possibly unsurprisingly Mr Trump has suggested climate change was made up by the Chinese to make US industry non-competitive.
Should both Trump and Clinton be on the card it will be a contest of two disliked candidates that both have very different plans for the US. I am of the opinion that there will be significant uncertainty surrounding the Greenback; however I don’t believe Cable pre-EU referendum will rise much higher than 1.50.
This week the US will report Employment Change, jobless claims, average earnings, unemployment rate and non-farm payrolls. Should the releases be positive this could present yet another window of opportunity for Janet Yellen and the Federal Reserve to increase Interest rates.
As we approach closer to the US election we may enter a volatile period for the greenback, you may wish to discuss the option of a forward contract with us if you need US dollars in the near future. Email me here to discuss further.
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