The US dollar continues to trade towards its best levels of the past year against most currency pairs including the pound, with the cable (GBP/USD) interbank rate trading around just 2-cents from its annual highs for much of yesterday’s trading session.
|Currency Pair||% Change (Month)||Difference on £200,000|
The global uncertainty and economic slowdown, that’s arguably been triggered by US President Donald Trumps implementation of trade tariffs, has so far played into the US dollar's hands. With the US dollar being considered a safe haven currency, investors have flocked to the greenback which has in-turn boosted its value.
But now there are talks of the next move from the US Federal Reserve Bank (Fed) being a rate cut, which could limit US dollar gains or even reverse its fortunes. There appears to have been a coordinated effort from members of the Fed to highlight the bank's willingness to cut rates if necessary. Earlier this month the Federal Reserve Chairman, Jerome Powell, said that the Central Bank would respond ‘as appropriate’ to counter the risks that the trade war between China and the US carry. Clients holding out for further US dollar gains should be wary of this as we could see a reversal of the greenback’s good fortunes.
President Trump has once again reiterated his plans to place tariffs on Mexican goods as soon as Monday owing to his concerns surrounding illegal immigration from the country, and Mexico’s apparent unwillingness to attempt to curb the flow of illegal immigrants.
President Trump has outlined plans to tariff Mexican goods such as cars, beers, tequila, fruit and vegetables at 5% on Monday, with plans to hike this by 5% each month until they reach a deal regarding curbing the flow of undocumented persons. His actions, could lead to detrimental effects on the US economy which could tie into a weaker US dollar eventually. Do feel free to register your interest with us if you wish to discuss this matter further.
As it’s the first Friday of the month, US Non-farm payrolls and the Unemployment Rate will be released this afternoon at 13.30. This data provides a snapshot of the US economy and can be one of the busiest times of the month, so do feel free to get in touch if you wish to plan around this event.
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