The USD has had an up and down week so far against the Pound as the ongoing trade disputes between the US and China continue to impact on the currency market. The two economies have already imposed tariffs on €50bn worth of each other goods, and the US has been said to be gearing up for another load of tariffs worth €200bn on Chinese goods which has added to the tensions.

Currency Pair% ChangeDifference on £200,000
GBPUSD3.2%$8,000

It was announced yesterday however that the Treasury Secretary Steven Mnuchin has proposed a meeting to discuss a mutually beneficial trade agreement. There is nothing concrete on whether this is a fact, but if the stalemate can be relieved then we could see movement on Dollar rates.

Producer prices fall to 1 year low

The Dollar did falter slightly during yesterday’s trading however after the producer price index fell in August for the first time in over a year, with a fall in the prices of food and other trade services. The US economy has been performing well on the whole however and inflation is still steadily rising and the jobs market is performing well.

As it stands the expectation is still that the US will raise interest rates later this month for the third time this year and if that is the case then we are likely to see further strength for the Dollar.

Producer prices fall to 1 year low

Last night also saw the release of the Fed’s beige book, in which the central Bank give an overview on the current economic situation in the US. One of the main points covered was the success in tackling unemployment over the past decade, one of the reasons which has led to the Fed’s recent tightening in monetary policy.

There was also a speech form Fed governor Brainard, stating that there is room to continue to raise rates over the next few years without harming economic growth, which is likely to continue to strengthen the USD in the future, especially if the ECB and BoE don’t follow suit.

Later on this afternoon there are jobless claims numbers and inflation figures released from the US at 13.30. If these figures impress then it will boost the chances of a hike at the end of this month and may see a spike in the Dollar’s value.

Tomorrow there is a raft of data set to be released from the US including import and export numbers and retail sales figures. Similarly to producer prices earlier this week, retail sales are expected to show a fall for August which could weigh on the Dollar’s strength and offer a spike for USD buyers to take advantage of.

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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