The Dollar treaded slightly higher in yesterday afternoon’s trading following reports that inflationary pressures are building in the US. This has added an extra weight on the Federal Reserve to continue on their path of aggressive interest rate hikes. The USD report below looks into the upcoming economic data releases and how they could impact USD rates amidst Trump's ever increasing trade tariffs. We have shown in the below table the range of exchange rates throughout trading hours yesterday and the difference in return you could have achieved in US Dollars when selling £200,000.00.
|Currency Pair||% Change||Difference on £200,000|
The producer price index, which measures the prices of goods and services sold by manufacturers in the US, was in fact a dull report. The monthly figure was unchanged whilst the yearly figure dropped ever so slightly. Despite this, inflationary pressures are still building due to the huge increase in oil prices thus far throughout 2018.
Ultimately yesterday’s data showed signs that President Donald Trump’s protectionist measures are starting to feed through into higher production costs which will ultimately be passed on to the consumer. Rising prices, known as inflation will keep the pressure on the Federal Reserve to keep interest rates high, ultimately strengthening the Dollar.
The main focus for this week for the USD will be the consumer price index data released later on today. Inflation and a strong labor market have been the key ingredients to the rate hikes and rate plan for the FED, so I would expect these figures to bring some volatility.
Outside of economics, the focus will remain on the ongoing trade war saga which has been reignited this week, after president Donald Trump slapped a further $23bn worth tariff on Chinese imported goods.
Furthermore, the US has imposed a series of sanctions on Russia after its involvement in the death of a Russian spy in the UK.
Yesterday, Russia confirmed that it would not lie down regarding these sanctions and that they would retaliate. These two events combined could actually help strengthen the Dollar due to its safe haven status. If these two events escalate further, I would expect Dollar strength.
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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