Encouraging economic data from various areas of the US economy has arguably been a key driver of the dollar’s strength over the last 12 months and suggestions of an economic slowdown towards the start of the year have seemingly been quashed.

Currency Pair% Change (Month)Difference on £200,000

Friday’s non-farm payroll data, which can typically influence market volatility saw that an additional 224k jobs had been created in the previous month and kept the USD steady going into the weekend. This week will see the release of further key economic data, which could in turn affect USD markets and could be of interest to clients anticipating a transfer involving the dollar.

From tomorrow, there will be a number of speeches from Federal Reserve members through the week which could provide an insight into the monetary stance of the central bank. There could be indications to future changes including current interest rate levels, as it has been reported that there could be a cut to the current level of 2.25% at some point this year.

In addition to this, inflation data from the Consumer Price Index will be released on Thursday and it is currently expected that there could be an increase of 0.1% from the previous month. With the recent positive jobs data and should there be no drop shown in the inflation data, it could potentially provide the Fed less incentive to change current interest rate levels in the near term, which could benefit the USD.

Continuing tensions between the US and China likely to impact USD

Chinese, US stance clear following G20 meeting

Despite reaching an apparent ‘truce’ at the G20 summit last week, it appears the relationship between the world’s two largest economies still remains tenuous. The respective leaders, Donald Trump and Xi Jinping, have stressed that no trade agreement will be reached unless changes to the current tariffs in place are made.

Over the weekend, a spokesman from the Chinese Ministry of Commerce suggested that all imposed tariffs must be dropped in order for a deal to be reached and the nations attitude on that is “clear and concise”. However, US President Donald Trump has since reiterated his stance on the matter and said that the 25% tariffs currently imposed on $250 billion of Chinese goods will remain.

The political and economic frictions between the US and China have affected economies across the world, so developments surrounding their relationship is being closely watched by investors and could therefore be of consideration to clients buying or selling the dollar. 

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