Friday saw the US Dollar rising following discussions from Trump to escalate Trade Wars, with tariffs of up to $267bn worth apparently ready to go. The US Dollar also rose on Friday following a strong US jobs report which saw 201k new Non-Agricultural jobs being created. Trump was quick to pat himself on the back and the news just proves the resilience of the US economy. The table below shows the range of cable exchange rates throughout the past month, with the factors likely to impact rates in the coming weeks outlined in the USD report that follows.
|Currency Pair||% Change||Difference on £200,000|
With high expectations that the US Federal Reserve will raise interest rates further when they meet on the 26th September, the Dollar appears likely to remain a favourite. The view is that rising trade issues will only help the US Dollar since other countries who will come off the worst.
There has also been a tightening of the US Dollar owing to concerns over the future value of many emerging market currencies and economies. Examples include the Turkish Lira and Argentinian Peso, which by devaluing has seen funds put back into the US Dollar, helping it to rise.
Whilst all the news is very positive now, some investors have begun to cite the longer term direction and raise concerns over a future slowdown up ahead for the US economy. We will probably need to see some actual examples of this but investors will undoubtedly be watching US economic data with a view to trying to catch the peak.
This might mean that further good news does not have quite as powerful an impact on rates as any bad news would. Any poor data might be the biggest mover on the US Dollar up ahead. The main news this week will be the Inflation data this Thursday at 13.30. There are also some speeches by Fed members Bostic on Monday and Bullard Tuesday.
It is difficult to pick too many holes in arguments for the US Dollar to remain strong, the US economy has grown 4% in the last quarter and the US Federal Reserve are on course to raise rates on the 26th September when they meet.
Thursday looks set to be the main day of the week with news on the latest Bank of England decision and also US Inflation. It seems other factors outside of economic data will probably remain the most important. Sterling remains very sensitive to headlines on Brexit and the US Dollar sensitive to many global factors.
One example might be the possibility for Idlib in North West Syria, the border with Turkey to become a point of conflict. Indications are the Syrians and Russians will launch a further offensive to target ‘terrorists’ which might well include civilians and may capture international concern, Donald Trump previously waded into these tensions. As a safe haven currency this might well see the US Dollar rise as increased global fears might encourage investors to seek the safety of the Greenback.
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