This US Dollar report will address the factors that are likely to affect exchange rates in the short term if you are buying abroad or making a currency transfer. The table below shows the difference in USD you would have achieved when buying £200,000 over the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBP/USD3.45%$8,600

The USD has suffered heavily this week with GBP gaining by more than 2.5 cents and EUR by more than 2 cents over the greenback since Monday. Personally I believe these losses can be attributed to the differing expectations on short term future monetary policy stances.

- Mario Draghi, head of the European Central Bank (ECB), spoke on Tuesday about a lessening need for such high monetary stimulus, leading markets to believe a cut in the ECB quantitative easing program may be on the cards sooner rather than later.

- Mark Carney, Governor of the Bank of England, surprised the market on Wednesday by shaking off his usual dovish tone in a speech at the ECB Central Banking Forum, stating some removal of monetary policy support is likely to become credible in the near future.

In stark contrast to Draghi and Carney, chairwoman of the FED Janet Yellen decided to use her speech on Tuesday to talk about the reduced risk of another banking crisis. Giving the markets nothing to get excited about.

Busy Week Ahead For Economic Data Releases Affecting USD

This afternoon Personal income (for May) and personal consumption are released at 1:30pm, allowing markets to determine the extent to which consumer’s purses are being squeezed.

Thursday brings ADP (Automatic Data Processing) Employment Change for June at 1:15pm, giving the market a glimpse into how the host of US labour market data released on Friday at 1:30pm may perform. The notable releases on Friday will include Average Weekly Hours, Unemployment rate, Participation rate and Nonfarm Payrolls.

Taking Advantage of Month End Flows

At the end of the month we often see increased volumes traded on the currency markets. Dubbed Month End Flows, it is the process of equity fund managers buying and selling foreign currency in order to rebalance their portfolios at the end of a month. This can give short term opportunities for our well-informed clients with a foreign currency requirement to act upon. Shifts in GBP/USD rates over 31st May could have given our clients with a Pound to Dollar purchase requirement an extra $2,800 on a £250,000 transfer.

Thank you for reading my USD currency report, if you have any questions about and upcoming transfer please don't hesitate to get in touch on 01494 725 353.

 

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.