With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. This report addresses some of the affecting factors for US Dollar exchange rates this year. The table below shows the difference in USD you would have received when buying £200,000.00 during the past 20 days.
|Currency Pair||% Change||Difference on £200,000|
It has been a very volatile year for the greenback so far as cable exchange rates have bounced between 1.20 and 1.35 since the start of 2017.
Evidently, the markets faith in President Trump is the main driver, with question marks surrounding his ability to fulfil his tax reforms and his handling of tense international relations appear and disappear on a weekly basis. One constant however remains the Federal reserve’s multiple interest rate hikes.
The dollar started the year with decade highs against the Pound as the markets began to factor in the multiple rate hikes promised by Fed Chair Janet Yellen. Inconsistent economic data since however had pulled these promises into doubt and the dollar struggled heavily thought out the summer as a result.
Last week’s impressive Wage growth figures helped the dollar gain some traction for the week ahead. Given inflation pressures were the main concern for the Fed before raising interest rates, if average earnings continue to climb at a healthy pace, it will leave very little reason for the Fed to not raise rates before the end of the year.
It will be interesting to see if the inflation and retail sales figures come out just as strong this Friday afternoon. Given how inconsistent these stats have been so far this year, I wouldn’t be surprised to see one or two surprises.
This afternoon FOMC member Neel Kashkari is due to speak, which will be followed Robert Kaplan’s speech this evening. These both will serve as precursors to the FOMC minutes report released on Wednesday evening. I can see them taking positivity from last week’s releases and expect the final report to make dollars slightly more expensive to buy. If you have a US dollar requirement it may pay to make a move before this release costs you.
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