Figures released last week including positive Employment growth and falling unemployment rates seem a further indicator of an upcoming interest rate hike from the Fed. The table below discusses how this information can impact monetary policy; the table below shows the differnece in USD you could have achieved when buying £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
Friday’s US labour market data helped the dollar to gain in Friday afternoon’s trading. Employment growth outperformed expectations and the unemployment rate dropped, whilst wage growth also posted positive figures. Throughout May there were 223K new jobs created outside the agricultural sector, way above the anticipated 190K.
Looking through these figures and it provides some fresh thought for the Federal Reserve. Despite the on-going trade wars, the message is clear that the labour market remains strong. The payroll report is often a volatile release however the expectations for a June rate rise from the Federal reserve is all but confirmed.
Four our clients that are reading this with a USD purchase to make, I am of the opinion that it is only going to get more expensive to do so.
Investors will be attracted to the highest global interest rates seen since the global recession, with American banks offering 2.0% on cash deposits if all goes ahead later this month. an influx in investors seeking higher returns would benefit the Dollar.
Although the markets have seemingly calmed over the weekend, the threat of an all-out trade war between the UK, US EU and China and still looms heavily and is weighing on the global markets. Whilst risk appetite remains high, safe heavens such as the USD and CHF are likely to benefit. I would expect this continue whilst the threat of global trade war continues.
With little data out this week for the markets to chew on from the US, the focus will be on the G7 summit in Canada in the upcoming week, where President Donald Trump is to meet world leaders on Friday, with whom he has recently increased tariffs on imported goods.
I’d expect further fireworks between China and the possibility of an all out trade war to keep the markets entertained in between, whilst US trade figures will steal the headlines on Wednesday, where the impact the on going trade war is likely to be revealed.
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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