With Trump's trade tariffs soon to come into place, investors are showing concern about the fall out from this in terms of the US' relationship with other countries. This market report discusses how these tariffs could affect the USD in the coming months. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
Last week was another fascinating week for clients involved in the currency market, and no surprises Donald Trump stole the headlines with ‘Trade Wars’. In a surprise move the President announced that he would increase import tariffs on steel and aluminium by 25% and 10% respectively. His reasoning is that he believes by increasing the tariffs it will protect US jobs, however many economists are suggesting it’s a bid to sway voters in the midterm congressional elections in November. In fact, a report by the Office of Fair Trading suggested that when Ex-President George W. Bush increased steel tariffs back in 2002, 200,000 jobs were lost in other industries such as the Car Manufacturing and Construction industry.
The question is will Non-Farm payroll numbers continue to impress and unemployment levels remain at record lows once the increase in tariffs come into play?
Regardless, globally central bankers and key politicians are showing concern as they feel there could be retaliation from other countries, and consequently this is an argument for why the US Dollar is under pressure once more. The Europeans last week stated if Donald Trump plans impact the European economy then they would raise tariffs on iconic American items such as the Harley Davidson. This story has the potential to have a major influence on US Dollar exchange rates, therefore if you are buying or selling the US Dollar in the upcoming months, I would recommend outlining your position to your account manager and they will keep you up to date.
At the back end of last week, the US released their latest Non-Farm Payroll numbers, Unemployment rate and wage growth numbers. The figures were a mixed bag with Non-Farm Payrolls exceeding expectation however wage growth fell back to 2.6% from 2.8. This is another reason why the US Dollar remains under pressure against the pound.
This week all eyes turn to US Consumer Price Index numbers, also known as inflation released at 12.30pm Tuesday afternoon. Inflation can have a major influence on monetary policy moving forward. At present US inflation remains at 2.1% and with the devaluation of the Dollar, I would expect inflation to remain at 2.1% or rise further. This release may potentially give the US Dollar a boost as an interest rate hike on March 21st would look extremely likely if inflation increases.
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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